7/27/2019 CRM (100 MARKS).doc

1/68- 1 -

Listening to customers must become everyones business. With most competitors moving

ever faster, the race will go to those who listen and respond more intently.

- Tom Peters, Thriving on Chaos

Chapter 1: Conceptual Framework for CRM

What is Customer Relationship management?

Before we begin to examine the conceptual foundations of CRM, it will be useful to

define what CRM is. A narrow perspective of customer relationship management is

database marketing emphasizing the promotional aspects of marketing linked to database

efforts.

Another narrow, yet relevant, viewpoint is to consider CRM only as customer retention in

which a variety of aftermarketing tactics is used for customer bonding or staying in touch

after the sale is made.

Shani and Chalasani define relationship marketing as an integrated effort to identify,

maintain, and build up a network with individuals consumers and to continuously

strengthen the network for mutual benefit of both sides, through interactive,

individualized and value-added contacts over a period of time.The core theme of all CRM and relationship marketing perspectives is its focus on co-

operative and collaborative relationships between the firm and its customers, and/or other

marketing actors.

CRM is based on the premise that, by having a better understanding of the customers

needs and desires we can keep them longer and sell more to them.

Growth Strategies International (GSI) performed a statistical analysis of Customer

satisfaction data encompassing the findings of over 20,000 customer surveys conducted

in 40 countries by Info quest.

7/27/2019 CRM (100 MARKS).doc

2/68- 2 -

The conclusions of the study were:

A Totally Satisfied Customer contributes 2.6 times as much revenue to a company as

a Somewhat Satisfied Customer.

A Totally Satisfied Customer contributes 17 times as much revenue as a SomewhatDissatisfied Customer.

A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a

Totally Satisfied Customer contributes to a business.

By reducing customer defection (by as little as 5%) will result in increase in profits

by 25% to 85% depending from industry to industry.

An important facet of CRM is customer selectivity. As several research studies have

shown not all customers are equally profitable (Infact in some cases 80% of the sales

come through 20% of the customers). The company must therefore be selective and

tailor its program and marketing efforts by segmenting and selecting appropriate

customers for individual marketing programs. In some cases, it could even lead to

outsourcing of some customers so that a company better utilize its resources on those

customers it can serve better and create mutual value. However, the objective of a

company is not to really prune its customer base but to identify appropriate customer

programs and methods that would be profitable and create value for the firm and the

customer. Hence, CRM is defined as:

Customer Relationship management is a comprehensive strategy and process of

acquiring, retaining and partnering with selective customers to create superior

value for the company and the customer.

As is implicit in the above definition, the purpose of CRM is to improve marketing

productivity. Marketing productivity is achieved by increasing marketing efficiency

and by enhancing marketing effectiveness. In CRM, marketing efficiency is achieved

because cooperative and collaborative processes help in reducing transaction costs andoverall development costs for the company. Two important processes for CRM include

proactive customer business development and building partnering relationship with

most important customers. These lead to superior value creation.

The basic concept is that the customer is not someone outside the organisation, he is a

part of the organisation.

7/27/2019 CRM (100 MARKS).doc

3/68- 3 -

High

Low

Low HighCustomer Value

Key CRM principles

Differentiate Customers: All customers are not equal; recognize and reward best

customers disproportionately. Understanding each customer becomes particularly

important. And the same customers reaction to a cellular company operator may be quitedifferent as compared to a car dealer. Besides for the same product or the service not all

customers can be treated alike and CRM needs to differentiate between a high value

customer and a low value customer.

What CRM needs to understand while differentiating customers is:

- Sensitivities, Tastes, Preferences and Personalities

- Lifestyle and age

- Culture Background and education

- Physical and psychological characteristics

Differentiating Offerings

Low value customer requiring high value customer offerings

Low value customer with potential to become high value in near future

High value customer requiring high value service

High value customer requiring low value service

Keeping Existing Customers

Low value customers whoRequire high levels of service

Must either purchase thehigher level of service or

become our competitors low

value/high cost customers

Low value customers whoRequire high levels of serviceMust either purchase the

higher level of service or

become our competitors lowvalue/high cost customers

ServiceReq

uirement

High value customers wrequire a high level of

service are maintained

without expanding thecostly offering to the en

customer population

High value customers wh

require a high level of

service are maintainedwithout expanding the

costly offering to the enticustomer population

Fig. 1 Customer value Service Matrix

7/27/2019 CRM (100 MARKS).doc

4/68- 4 -

High

Low

*Focus On Short Term Profitability.

Spend Minimum Energy To Meet Your

Objectives.

#Dont Pursue.

Use Opportunity As It Comes.

Short Term Acquisition Shouldnt Affect

Long Term Image.

*Very cautious decision needed. Re-examine

business Plan & Strategy. Evaluate That

Your Loss (i.e. Your competitors gain)

Doesnt become nightmare for you.

#Needs In-depth strategic review as acquisition

alone and dissatisfaction later could be more

harmful

Low High

Grading customers from very satisfied to very disappoint should help the organisation in

improving its customer satisfaction levels and scores. As the satisfaction level for each

customer improves so shall the customer retention with the organisation.

Maximizing Life time valueExploit up-selling and cross-selling potential. By identifying life stage and life event

trigger points by customer, marketers can maximize share of purchase potential . Thus the

single adults shall require a new car stereo and as he grows into a married couple his

needs grow into appliances.

Increase Loyalty

Loyal customers are more profitable. Any company will like its mindshare status to

improve from being a suspect to being an advocate.

Company has to invest in terms of its product and service offerings to its customers. It

has to innovate and meet the very needs of its clients/ customers so that they remain as

advocates on the loyalty curve. Referral sales invariably are low cost high margin sales.

(Fig 2. Categorizing Customers)

*You have No Choice But To

Handle Them Very Carefully.

Will Consume Energy

# Think of Innovative Ways of getting

them on Your Side, But the Cost of

Acquisition Must Be Controlled

StrategicIm

portanceToYour

Business

P

lan

*Cultivate Relationship.

Spend Energy.

Go Out Of Your Way.

#Think Of Strategies TO Move ThemAway From Competition.Will Consume Disproportionately

High Energy.

Relationship & Profitability Potential

*Existing

Customer

#Potential

Customers

7/27/2019 CRM (100 MARKS).doc

5/68- 5 -

Summarizing CRM activities:

The CRM cycle can be briefly described as follows:

1. Learning from customers and prospects, (having in depth knowledge of customer)

2. Creating value for customers and prospects

3. Creating loyalty

4. Acquiring new customers

5. Creating profits

6. Acquiring new customers

1

Creating value

for customers &

prospects

2Creating loyalcustomers

3

Acquiring newcustomers

4

5

Creating

Profits

Learning from

customers a&

prospects

Fig.3

CRM Activities

Customer Retention

and referrals for newcustomers

Customer NeedAssessment & Acquisition

Customer Development

through personalizationand customization

Customer Equity Leverage through

Cross Selling and Up Selling

Figure 4 Customer Life Cycle Management

7/27/2019 CRM (100 MARKS).doc

6/68- 6 -

The Emergence of CRM Practice

The Past:

Looking back at a snapshot history of marketing, we can see the following clear

developments and progression over the last four decades:

1960s the era of Mass Marketing, when Gibbs SR toothpaste began the first

marketing of this kind with its black and white campaign.

1970s saw the beginning of segmentation, direct mail campaigns and early

telemarketing (such as publishing)

1980s where Niche marketing made millionaires of those who were best at it.

1990s Relationship Marketing. The explosion of telemarketing and call centers, all

set up to develop relationships with customers. The recognition of the true value of

retention and the use of Lifetime Value as a business case.

In addition to this, a number of key marketing concepts can also be used to see where

CRM has developed from:

Satisfying Needs, Customer Orientation

The organisation needs to be arranged so that all functions contribute

Profit must be the consequence of delighting customers (Kotler)

Developing customer relationship has historical antecedents going back into the pre

industrial era. Similarly artisans often developed customized produce for each customer.

Such direct interaction led to relational bonding between the producer and the consumer.

It was only after industrial eras mass production society and the advent of the

middlemen that there were less frequent interactions between producers and the

consumers leading to transactions oriented marketing. The production and consumption

factions got separated leading to marketing functions being performed by the middle men

and middlemen are in general oriented towards the economic aspects of buying since the

largest cost is often the cost of goods sold.

In recent years however, several factors have contributed to the rapid development and

evolution of CRM. These include: -

7/27/2019 CRM (100 MARKS).doc

7/68- 7 -

1. The growing de-intermediation process in many industries due to the advent of

sophisticated computer and telecommunication technologies that allow producers to

directly interact with end-customers. For example, in many industries such as

airlines, banks insurance, software or household appliances and even consumables,

the de-intermediation process is fast changing the nature of marketing and

consequently making relationship marketing more popular. Databases and direct

marketing tools give them the means to individualize their marketing efforts.

2. Advances in information technology, networking and manufacturing technology have

helped companies to quickly match competition. As a result product quality and cost

are no longer significant competitive advantages.

3. The growth in service economy. Since services are typically produced and delivered

at the same institution, it minimizes the role of the middlemen.

4. Another force driving the adoption of CRM has been the total quality movement.

When companies embraced TQM it became necessary to involve customers and

suppliers in implementing the program at all levels of the value chain. This needed

close working relationships with the customers. Thus several companies such as

Motorola, IBM, General Motors, Xerox, Ford, Toyota, etc formed partnering relations

with suppliers and customers to practice TQM. Other programs such as JIT and MRP

also made use of interdependent relationships between suppliers and customers.

5. Customer expectations are changing almost on a daily basis. Newly Empowered

customers who choose how to communicate with the companies across various

available channels. Also nowadays consumers expect a high degree of

personalization.

6. Emerging real time, interactive channels including e-mail, ATMs and call centre that

must be synchronized with customers non-electronic activities. The speed of

business change, requiring flexibility and rapid adoption to technologies.

7. In the current era of hyper competition, marketers are forced to be more concerned

with customer retention and customer loyalty.

8. As several researches have found out retaining customers is less expensive and more

sustainable competitive advantage than acquiring new ones.

7/27/2019 CRM (100 MARKS).doc

8/68- 8 -

9. On the supply side it pays more to develop closer relationships with a few suppliers

than to develop more vendors.

10. In addition several marketers are concerned with keeping customers for life than

making one time sale. There is a greater opportunity for up selling and cross selling.

In a recent study, Naidu, et al(1999) found that relational intensity increased in

hospitals facing a high degree of competitive intensity

11. The globalization of world marketplace makes it necessary to have global account

management for the customers.

CRM Formation Process

In the formation process, three important decision areas relate to defining the purpose (or

objectives) of engaging in CRM, selecting parties (or customer partners) for appropriate

CRM programs and developing programs (or relational activity schemes) for relationship

engagement with the customer.

Purpose

IncreaseEffectiveness

Improve

Programs

Account

Management Retention

Partners

Criteria

Process

Team Structure

Role Specification

Planning Process

Process Alignment

Monitoring Process

Communication

Employee Motivation

Employee Training

RelationshipPerformance

Strategic

Financial Marketing

Retention

Evolution

Enhancement

Improvement

Fig 5. CRM Process Framework

7/27/2019 CRM (100 MARKS).doc

9/68- 9 -

CRM Purpose

The overall purpose of CRM is to improve marketing productivity and enhance value for

parties in involved in the relationship. By seeking and achieving operational goals, such

as lower distribution costs, streamlining order processing and inventory management,

reducing the burden of excessive customer acquisition cost, and through customer

retention economics, firms could achieve greater marketing efficiencies. They can

enhance marketing effectiveness by carefully selecting, customers for its various

programs, individualizing and personalizing their market offerings to anticipate and serve

the emerging needs of individual customer, building customer loyalty and commitment,

partnering to enter new markets and develop new products, and redefining the

competitive playing field for their company. Thus, stating the objectives and defining the

purpose of CRM in a company helps clarify the nature of CRM programs and activities

that ought to be performed by the partners. Defining the purpose would also help in

identifying suitable relationship partners who have necessary expectations and

capabilities to fulfill mutual goals. It will further help in evaluating CRM performance by

comparing results achieved against objectives. These objectives could be specified as

financial goals, marketing goals, strategic goals, operational goals, and general goals.

Customers are motivated to engage in relational behavior because of psychological and

sociological benefits associated with reduction in choice decisions. In addition, to their

natural inclination of reducing choices, consumers are motivated to seek the rewards and

benefits associated with CRM programs.

Relational Parties

In the Initial phase, a company has to decide which customer type and specific customers

or customer groups will be the focus of their CRM activities.

CRM Programs

A careful review of literature and observation of corporate practices suggest that there are

three types of CRM programs: continuity marketing; one-to-one marketing; and,

partnering programs. These take different forms depending on whether they are meant for

end-consumers, distributor consumers, or business-to-business customers.

7/27/2019 CRM (100 MARKS).doc

10/68- 10 -

Table 1 presents various types of CRM programs developed for different types of

customers.

Customer Types

Program Types

Mass Markets Distributors Business to Business

Markets

Continuity Marketing After- Marketing

Loyalty Programs

Cross-Selling

Continuos

Replenishment

ECR Programs

Special Sourcing

Arrangements

One-to-One Marketing Permission Marketing

Personalization

Customer Business

Development

Key Account

Global Account

Partnering/Company-

Marketing

Affinity Partnering

Co-Branding

Logistics Partnering

Joint Marketing

Strategic

Partnership

Co-Design

Co-DevelopmentTable 1 CRM Programs

Continuity Marketing Programs

Take the shape of membership and loyalty card programs where customers are often

rewarded for their member and loyalty relationships with the marketers. The basic

premise of continuity marketing programs is to retain customers and increase loyalty

through long-term special services that has a potential to increase mutual value through

learning about each other.

One-to-one Marketing

Meeting and satisfying each customers need uniquely and individually. In the mass

markets individualized information on customers is now possible at low costs due to the

rapid development in the information technology and due to availability of scalable data

warehouses and data mining products. By using online information and databases on

individual customer interactions, marketers aim to fulfill the unique needs of each mass-

market customer. Information on individual customers is utilized to develop frequencymarketing, interactive marketing, and aftermarketing programs in order to develop

relationship with high-yielding customers. In the context of business-to-business markets,

individual marketing has been in place of quite sometime. Known as Key Account

Management Program, here marketers appoint customer teams to husband the company

resources according to individual customer needs.

7/27/2019 CRM (100 MARKS).doc

11/68- 11 -

Partnering Programs

The third type of CRM programs is partnering relationships between customer and

marketers to serve end user needs. In the mass markets, two types of partnering programs

are most common: co-branding and affinity partnering.

CRM Governance Process

Greater the scope of CRM program and associated tasks, and the more complex is the

composition of the relationship management team; the more critical is the role

specification decision for the partnering firms.

It is essential to establish intra-company communication particularly among all

concerned individuals and corporate functions that directly play a role in managing

the relationship with a specific customer or customer group.

With mass-market customers frequent face-to-face interactions will be uneconomical.

Thus marketers should create common bonds through symbolic relationships,

endorsements, affinity groups, and membership benefits or by creating online

communities

Involving customers in the planning process would ensure their support in plan

implementation and achievement of planned goals. All customers are not willing to

participate in the planning process nor is it possible to involve all of then for

relationship marketing programs for the mass markets.

Operating process between the company and customer partners: Operating alignment

will be needed in order processing, accounting and budgeting processes, information

systems, merchandising process, etc

Human resources decisions are also important in creating the right organisation

climate for managing relationship marketing. Training employees to interact with

customers, to work in teams, and manage relationship expectations are important. So

is the issue of creating the right motivation through incentives and rewards.

7/27/2019 CRM (100 MARKS).doc

12/68- 12 -

Periodic evaluation of goals and results, initiating changes in relationship structure,

design or governance process if needed, creating a system for discussing problems

and resolving conflicts.

CRM Performance Evaluation Process

Without a proper performance metrics to evaluate CRM efforts, it would be hard to make

objective decisions regarding continuation, modification, enhancement, or termination of

CRM programs.

If co-operative and collaborative relationship with the customers is treated as an

intangible asset of the firm, its economic value add can be assessed using discounted

future cash flows estimates. Here the term relationship equity comes in where you

measure the intangible assets of the firm.

Another global measure used by firms to monitor CRM performance is the measurement

of relationship satisfaction. By measuring relationship satisfaction, one could estimate the

propensity of either partys inclination to continue or terminate the relationship. Such

propensity could also be indirectly measured by measuring customer loyalty.

CRM Implementation Issues

One of the most interesting aspects of CRM development is the multitude of customer

interfaces that a company has to manage in todays context. Until recently, a companys

direct interface with the customers, if any was primarily through sales people or service

agents. In todays environment most companies interface with their customers through a

variety of channels including sales people, service personnel, call centers, Internetwebsites, marketing departments, fulfillment houses, market and business development

agents, etc. For large customers it also includes cross-functional teams that may include

personnel from various functional departments. While each of these units could operate

independently, they still need to share information about individual customers and their

interactions with the company on a real time basis. For example, a customer who just

7/27/2019 CRM (100 MARKS).doc

13/68- 13 -

placed an order on the Internet and subsequently calls the call centre for order verification

expects the call centre staff to know the details of his or her order history. Similarly a

customer approached by a sales person unaware that she has recently complained about

dissatisfactory customer service, is not likely to be treated kindly by the customer.

Therefore effective CRM requires a front-line information system that shares relevant

customer information across all interface units. Relational databases, data warehousing

and data mining tools are thus very valuable for CRM systems and solutions.

However, the challenge is to develop and integrated CRM platform that collects relevant

data input at each customer interface and simultaneously provides knowledge output

about the strategy and tactics suitable to win customer loyalty and support. If a call centre

personnel cannot identify or differentiate a high value customer and does not know what

to up-sell or cross sell to him then it would be a tremendous loss of opportunity for the

company. Although most CRM software solutions based on relational databases are

helping share customer information, they still do not provide knowledge output to the

front line personnel. As shown in Figure.6, CRM solutions platform needs to be based on

interactive technology and processes. It should assist the company in developing and

enhancing customer interactions and one-to-one marketing through the help of suitable

intelligent agents that help develop front-line relationship with customers. Such a system

would identify appropriate data inputs at each customer interaction site and use analytical

platforms to generate appropriate knowledge output for front-line staff during customer

interactions.

In addition, implementation tools to support interactive solutions for customer

profitability analysis, customer segmentation, demand generation, account planning,

opportunity management, contact management, integrated marketing communication,

customer care strategies, customer problem solving, virtual team management of large

global accounts, and measuring CRM performance would be the next level of solution

sought by most enterprises.

7/27/2019 CRM (100 MARKS).doc

14/68- 14 -

Knowledge

Output

KnowledgeOutput

KnowledgeOutput

Knowledge

Output

KnowledgeOutput

Data Input

Data Input

Data Input

Data Input

Data Input

Figure 6. Information Platform for CRM

Since CRM implementation comprises a significant information technology (IT)

component, these companies have handed over the responsibility of CRM

implementation to information technology departments. They are focussed on simply

installing CRM software solutions without a CRM strategy or program in place. This

leads to creating an operational tool within the company, but the usability and

effectiveness in producing desirable results from such tools is limited. CRM tools would

be valuable when they are used to identify and differentiate individual customers and to

generate individualized offer and fulfill customized solutions. The lack of CRM strategy

or CRM programs, would leave the front-line people without any knowledge of what they

should be doing with the additional customer information that they now have access to.

For those who apply themselves and develop improvised solutions, it could backfire as ad

hoc solutions could cause unintended deterioration in customer relationships. Appropriate

strategy and excellent implementation are both needed for obtaining successful results.

Sales Group

Market

Development

MarketingCustomer

Operations/

Service

Call Centre

Internet

Knowledge

Output

Data Input

Integrated Marketing

Information Platform

Information Content

Relational Databases

Decision Support System

Active Intelligence

Business Rules Collaborative Communication

User Profiles

7/27/2019 CRM (100 MARKS).doc

15/68- 15 -

From a corporate implementation point of view, CRM should not be misunderstood

to simply mean a software solutions implementation project .

Chapter 2: CRM and Related Concepts

Knowledge Management (KM) with focus on CRM

As Peter Drucker defined Information is data endowed with relevance and purpose.

To effectively implement a CRM solution it is very important to identify real knowledge

about different types of customers (Viz. Most valued customers, Most grow able

customers, Below zero customers) from plethora of internal and external data, figures,

surveys, etc. A straightway technique is to create a data warehouse, thereafter

information which is required to effectively implement principles of CRM, could be

mined out of this data warehouse.

Marketing, sales after-sales people would be knowledge workers. Front office could be

more productive if they could utilize customer knowledge. Knowledge Management

(KM) is about embracing a diversity of knowledge resources, like legacy systems,

existing data warehouses, portals, websites, customers, suppliers, partners, external

marketing research agencies and cultivating the knowledge where it resides.Metrics, ROI, Balance Scorecard method, benchmarking are some of the common

technique of KM system evaluation. KM implementation is the key to CRM.

Its a proven fact that 80% of organization revenue comes form 20% of its customers; it

becomes imperative to design CRM solutions keeping in mind these most valuable

customers and to leverage 80% non structured data of about 20% of these most valuable

customers.

Just as more tangible corporate assets like computer systems have a finite shell life, so

too does knowledge, it must be available at the right time to be able to act upon it.

Retaining tacit knowledge (derived from experiences, data and documents) means

retaining the individual, which is invariably not possible. It is possible to generate

explicit knowledge from tacit knowledge, but its a complex exercise. The key ingredient

of this exchange is face to face sharing of knowledge or virtual environmental tools like

7/27/2019 CRM (100 MARKS).doc

16/68- 16 -

Lotus Notes, which can facilitate tacit knowledge exchange. Hence for tacit knowledge

exchange text mining is very useful and important. There are ways to do text mining, like

search engines, web solutions, text analysis tools, etc. The key to successful customer

KM is personalization, i.e. how to extract the knowledge that is pertinent to the user and

translate it into a format that is easily understood. The choice of Customer Knowledge

Management (CKM) architecture should have a layered approach. Existing systems

should be seamlessly linked with the proposed layer. The choice for CKM system could

be Web (Enterprise information portal) or a packaged solution such as Lotus Notes,

Microsoft solution.

Role of CRM in the Context of SCM

In the context of SCM, where alliances and partnerships are keys to success, CRM plays

an important role in building long-term relationships. Apart from the end-users, it

involves internal employees, channel members and other external entities such as

advertising agencies and consulting orgnizations. The success of relationships depends

upon sharing of savings from the supply chain, which may be reinvested to further

enhance its efficiency, and sustain the competitive advantage.

The supply chain of tomorrow will look like a virtual organisation, seamlessly integrated

through sharing data and savings as well. The bonding between partners will be closely

held by CRM practices.

ERP and CRM

Like ERP, CRM solutions focus on automating and improving business processes, albeit

in front-office areas such as marketing, sales, customer service, and customer support.

Whereas ERP implementation can result in improved organizational efficiency, CRM

aims to provide organizational effectiveness by reducing sales cycle and selling cost,

identifying markets and channels for expansion, and improving customer value,

satisfaction, profitability, and retention. While CRM applications provide the frameworkfor embodying, promoting and executing best practices in customer facing activities, ERP

provides the backbone, resources and operational applications to make organizations

more efficient in achieving these goals.

Regain Management

7/27/2019 CRM (100 MARKS).doc

17/68- 17 -

The cost of acquiring a new customer is 9 to 12 times that of holding on to an existing

customer.-Philip Kotler

A study conducted by Andersen Consulting in conjunction with EIU found that

businesses are intensifying their focus on customer and are taking a more process

oriented approach to customer relationship management. Key Findings of the study are:

(a) The number of businesses citing customer retention as a critically important measure

in the next 5 years has jumped to nearly 60%, as companies shift their focus from

attracting new customer to retaining their more profitable ones;

(b) By 2002, 83% of companies expect to have customer data warehouses, up from about

40% today; and

(c) Companies predict their use of Internet to collect customer data will surge by 430%

Consumer Life Time Value

Quantifying the value of customers is absolutely essential in regain management. In

fact, the percentage of profit a company makes from continued sales to its own customer

base is consistently higher than the profit made on original sale.. Each of the customers

then delivers an income stream and the stream of profit far exceeds the value of original

purchase. Income streams contribute cash flows in terms of years for any single product.

Regain Strategies:

Customization

Differentiation Strategies

The lost customer would be segmented differently from the existing customer. Base and

the company could provide additional features and benefits to win them back.

Wow Syndrome

For example, a client checks into a hotel and his/her room isnt ready. The clerk could

respond by You are in luck! Your room isnt ready. That means you get to eat breakfast

on us and use our business centre for free!

7/27/2019 CRM (100 MARKS).doc

18/68- 18 -

Chapter 3: Technological Tools for CRM

Tools

Customer database

A good customer information system should consist of a regular flow of information,

systematic collection of information that is properly evaluated and compared against

different points in time, and it has sufficient depth to understand the customer and

accurately anticipate their behavioral patterns in future. The customer database helps

the company to plan, implement, and monitor customer contact. Customer

relationships are increasingly sustained by information systems. Companies are

increasingly adding data from a variety of sources to their databases. Customer data

strategy should focus on processes to manage customer acquisition, retention, and

development.

Other Technologies that are used are as follows:

Electronic Point of Sale(EPOS)

Sales Force Automation

Customer Service Helpdesk

Call Centers

Call Centre helps in automating the operations of inbound and outbound calls generated

between company and its customer. These solutions integrate the voice switch of

automated telephone systems (e.g. EPABX) with agent host software allowing for

automating call routing to agents, auto display of relevant customer data, predictive

dialing, self service Interactive Voice Response systems, etc. These systems are useful in

high volume segments like banking, telecom and hospitality. Today, more innovative

channels of interacting with customers are emerging as a result of new technology, such

7/27/2019 CRM (100 MARKS).doc

19/68- 19 -

as global telephone based calls centers and the internet. Companies are now focusing to

offer solutions that leverage the internet in building comprehensive CRM systems

allowing them to handle customer interactions in all forms.

While CRM solutions are front office automation solutions, ERP is back office

automation solution. An ERP helps in automating business functions of production,

finance, inventory, order fulfillment and human resource giving an integrated view of

business, where as CRM automates the relationship with customer covering contact and

opportunity management , marketing and product knowledge, sales force management,

sales forecasting, customer order processing and fulfillment, delivery, installation, pre-

sale and post-sale services and complaint handling by providing an integrated view of the

customer. It is necessary that the two systems integrate with each other and complement

information as well as business workflow. Therefore, CRM and ERP are complementary.

This integration of CRM with ERP helps companies to provide faster customer service

through an enabled network, which can direct all customer queries and issues through

appropriate channels to the right place for speedy resolution. This will help the company

in tracking and correcting the product problems reported by customers by feeding this

information into the R&D operations via ERP.

CRM A FRAMEWORK

Traditional Approach to CRM

Customer Contact by

Telephone

Mail

In Person

Personal Selling

After Sales Service Complaint Handling

Account Management

Customer care

Customer Satisfaction

Web-Enabled & Integration

Approach

Customer Information

System

Customer Database

Electronic Point of Sale

Sales Force Automation

Automation of Customer

Support

Call Centres

Systems Integration

Lifetime value of a Customer

Integration with

technology

(Web & Internet)

7/27/2019 CRM (100 MARKS).doc

20/68- 20 -

Data Mining for CRM: Some Relevant issues

Data mining is an important enabler for CRM. Advances in data storage and processing

technologies have made it possible today to store very large amounts of data in what are

called data warehouses and then use data mining tools to extract relevant information.

Data mining helps in the process of understanding a customer by providing the necessary

information and facilitates informed decision-making.

Operational CRM solutions involve integration of business processes involving customer

touch points. Collaborative CRM involves the facilitation of collaborative services(such

as e-mail) to facilitate interactions between customer and employees. All this effort

produces rich data that feeds the Analytical CRM technologies.

Information Requirements of an Effective CRM Solution

The employees of a firm employing CRM would require rich information about their firm

and customer base including:

Information about the market

Information about the firm

The current segment

Demographic Distribution (by age, sex, education, income, marital status, etc)

The firms best customers and the segment they belong to, products they buy,

preferences, habits and tastes of each segment.

Operational CRM Collaborative CRMAnalytical CRM

Customer

Fig.8 Interactions between CRM Technologies

7/27/2019 CRM (100 MARKS).doc

21/68- 21 -

Individual level information consisting of: Customer personal details such as name, address, family details, education, etc

The customer group /segment to which the individual belongs

History of present and past behavior

Likes, dislikes, habits and preferences

Events coming up in their personal life etc.

Levels of data mining operations

The aggregate or the Macro level

Mining at the macro level gives us a broad overview of the data e.g. when customers

of the retail store are segmented by profitability criteria, we obtain clusters that are

profitable to various extents. Knowledge obtained by mining at macro level is useful

when dealing with situations where:

We are dealing with a customer about whom we do not have individual

information. Hence, we need to extrapolate the characteristics of the group to which

he/she might belong. In retail store example, a store can segment its customers onbasis of age and characteristics can be extracted. When a new customer enters the

store, the salesman could use his intuition in arriving at the customers age and

recover the characteristics of that age group such as the frequently bought products,

color preferences, etc.

Targeting new set of customers. If the retail chain has opened a new store it can

use the data from the most similar current store to predict the behavior of the new

prospects.

We are dealing with aspects of the service, which influence a majority of the

customer and therefore cannot be customized to suit individual tastes, example being

the design of the physical layout of a retail store.

Predicting the possibility of an action that the cu has never undertaken. A

customer might not have tried out a new product because he/she was not aware of it.

7/27/2019 CRM (100 MARKS).doc

22/68- 22 -

A salesman can encourage him/her to try out the product if his/her profile matches

that of the current product users.

Classification:

Classification is a process that maps a given data item into one of the several predefined

classes. CRM uses classification for a variety of purposes like behavior prediction,

product and customer categorization.

Regression

Regression is the operation of learning a function that predicts the value of a real valued

dependent variable based on values of other independent variables. Regression finds

application in a CRM environment where prediction needs to be made about the behavior

regarding real value added variables. Suppose the retail store collects data on the monthly

visits of the customers viz. Frequency, time spent on each visit. And purchases made

during each visit. If the manager has a strong intuition that total purchase is linked to

frequency of visit, then this situation can be modeled by regression. This model can then

be used to predict future purchases of a customer. Regression needs sufficient amount of

data to be reliable and valid.

Link Analysis

Link Analysis seeks to establish relationship between items or variables in a database

record to expose patterns and trends. Link analysis can also trace connections between

items of record over time. The most important link analysis application in CRM, called

market basket analysis, is an operation that seeks relationship between product items

characterizing product affinities or buyer preferences. The retail store collects thousands

of interactions daily. A link analysis task performed on this data will point to items that

are bought together e.g. bread and butter are bought together rather than bread and orange

juice. Such information can be used to design store layouts, design coupons, etc.

Segmentation

Segmentation aims to identify a finite set of naturally occurring clusters or categories to

describe data.

Deviation Detection

7/27/2019 CRM (100 MARKS).doc

23/68- 23 -

Deviation Detection (DD) focuses on discovering the most significant changes in the data

from previously measured, expected or normative values. Most CRM solutions have a

DD task running in parallel on a regular basis. Suppose a retailer finds out that the sales

from a particular section of the store have been much less than expected. This deviation

on further analysis points out to non-stocking of a popular brand.

Tools such as decision trees, rule induction, case based reasoning, visualization

techniques, nearest neighbor techniques, clustering algorithms, etc are used for the above

purposes.

The existing CRM Solutions

Delivering the 360 view requires automation to bring together all the data concerning a

customer. This implies the organization has to change from:

Mass Marketing Product Focus

Product Focus Customer Focus

Economies of Scale Economies of time

1 way communication Interactive

Response Time Real Time

Present CRM Alternatives

Present CRM solutions are offered by host of vendors that are to a great extent not

industry specific. While there are some vendors, who have come up with industry

specific solutions, the broad model around which the CRM solutions are built remain the

same. Adopting a similar or a look a like solution across industries is what causes major

strain in servicing a customer.

Typical offerings of the current CRM solutions (such as Siebel, Oracle Apps or

MySap.com, etc) vary from solution to solution. However typical CRM offerings consist

of:

Customer Development Field sales, Tele sales, Internet Sales

Service Centre Call Centers, Field Service

Sale management and support Internet Customer Service

Market Analysis Service Interaction Centre

Internet, Tele marketing Business Partner Collaboration

7/27/2019 CRM (100 MARKS).doc

24/68- 24 -

Product and brand management

The Customer focused organization: CRM Model

The idea here is to develop systems that allow flexibility, work on not completely

predefined processes so as to enable front office to be proactive to each customer needs

The Mindset impact on CRM

A typical data warehouse will have the following components:

While developing a data warehouse one takes into account all the legacy and operation

systems. But typically sales teams could be managing leads on an excel worksheet.

Sometimes critical DSS input like Profitability Analysis itself may reside on a

worksheet.

Thus a Data Warehouse solution must be able to accept information from such

unstructured sources as well as budget for an open architecture to enable plug-in for

systems to be developed in the future.

a) Generally the existing information is mapped into a data warehouse. Since a

customer centric info-base is being developed, its is critical that extensive customer

OLAP Tool

Risk

Cube

F P & A

Cube

Mktg &

Sales Cube

Campaign

Mgmt

Data

Warehouse

Legacy & Operation

Extract & Transfer

7/27/2019 CRM (100 MARKS).doc

25/68- 25 -

research is done to identify their information needs and thus what profile data will be

relevant for us. Thus any data-warehousing project needs to work closely with the

research team.

b) After extracting the data from various systems, we need to scrub and clean the data,

reduplicated.

c) Even though we may find 80% of the names in a database of a million customers

using combinations of lets say a 1000 first and last names, to take into account all

possible combinations we may actually need a database of 10,000 first and last

names. Even then we may not be able to comprehensively cover all future

combinations. Now, the system must expect this kind of input on a regular basis

rather than it happening by exception, as is the case with updating masters in a

traditional system.

d) Ad-hoc querying is a tool that is most often used in such applications. Unfortunately

not much effort is made to make this tool end-user friendly so that even a layman

could run his/her reports. Typically a data-warehouse and data mining person is

placed in information technology to manage all queries. With the advent of tools like

Metadata Repository, drill down OLAP tools and Palm Pilots it is now possible for

hardcore marketing and sales types to directly access and run their queries. Infact we

need to budget for training the sales and marketing team with the use of data-

warehouse.

e) The real power of the CRM system is its ability to provide a rich, value added

experience to our customers at all touch points call Centers, kiosks, retail outlets,

mobile devices, Internet and branches. Integration and information dissemination

must happen at all these points. Thus the CRM specialist in marketing must be well

versed with all these tools and techniques.

eCRM

What is eCRM?

In simplest terms eCRM provides companies with means to conduct interactive,

personalized and relevant communications with customer across both electronic and

traditional channels. It utilizes a complete view of the customer to make decisions about

7/27/2019 CRM (100 MARKS).doc

26/68- 26 -

messaging, offers and channel delivery. It synchronizes communication across otherwise

disjoint-customer facing systems. It adheres to permission based practices, respecting

individuals preferences regarding how and whether they wish to communicate with you

and it focuses on understanding how the economics of customer relationship affect the

business.

eCRM Vs CRM

CRM is essentially a business strategy for acquiring and maintaining the right

customers over the long term. Within this framework, a number of channels exist for

interacting with customers. One of these channels is electronic and has been labeled

e-commerce or e-business. This electronic channel does not replace the sales force,

the call Centre, or even the fax. It is simply another extension, albeit a powerful new one,

to the customer. The thrust of eCRM is not what the organisation is doing on the web

but how fully the organization ties its on-line channel back to its traditional channels, or

customer touch points.

Why employ eCRM?

Companies need to take firm initiatives on the eCRM frontier to

Optimize the value of interactive relationship

Enable the business to extend its personalized reach

Company-ordinate marketing activities across all customer channels.

Leverage customer information for more effective emarketing and ebusiness

Focus the business on improving customer relationship and earning a greater share

of each customers business through consistent measurement, assessment and

actionable customer strategies.

The six Es of eCRM

1. Electronic channels

2. Enterprise

3. Empowerment

4. Economics

5. Evaluation

7/27/2019 CRM (100 MARKS).doc

27/68- 27 -

6. External Information

eCRM Architecture

The primary inputs to this module are mainly from the eCRM Assessment and strategy

alignment modules. During this stage the company will try and develop a Connected

Enterprise Architecture (CEA) within the context of the companys own CRM strategy.

The following is a set of technical eCRM capabilities and applications that collectively

and ideally comprise a full eCRM solution:

Customer Analytical Software

Data mining software

Campaign Management software

Business Simulation A real time decision engine

Review and Assessment of CRM solutions

CRM software applications embody best practices and employs advanced technologies to

help organizations achieve these goals.

Categories of CRM solutions

Any enterprise, which wants to implement CRM solutions, can choose from four

categories of solutions Integrated applications suite

Interfaced applications bundle

Interfaced best of breed solutions

Best of cluster

Selecting an interfaced best of breed approach for pure functionality or a front office

application suite solely for integration limits enterprise choices. Enterprises need to start

with a clear picture of the basic truths of integration, interfacing and functionality. An

integrated application suite is a set of application that employs a common architecture,

referencing a common logical database with a single schema. Some suites are more often

interfaced application bundle i.e. a set of interfaced application from a single vendor

containing more than one technical architecture or more than one logical database-

frequently assembled by the vendor through the process of acquisition or partnership

7/27/2019 CRM (100 MARKS).doc

28/68- 28 -

An alternative approach to suites is an interfaced best of breed solution an approach

whereby an enterprise selects from multiple vendors a set of applications that must be

interfaced to work together, either by the enterprise, one of the selected vendors or a third

party integrator. The individual applications are not the best in any objective sense.

Rather, some enterprises select the applications because they best meet the particular

needs. The challenge of this approach is that, in some cases, the enterprise fails to

complete the necessary interfaces to get the individual applications working together;

consequently, the applications remain stove pipes. Best of cluster is similar to best of

breed except that here best is chosen from the cluster and they are interfaced.

Key requirements for CRM solutions

Some of the functional and technical requirements for CRM solutions are as listed below:

Business intelligence and analytical capabilities

Unified channels of customer interactions

Support for web based functionality

Centralized repository for customer information

Integrated work flow

Integration with ERP applications

Functional Components of CRM solutionCRM applications are a convergence of functional components, advanced technologies

and channels. Functional components and channels are described below:

Sales applications

Common applications include calendar and scheduling, contact and account management;

compensation; opportunity and pipeline management; sales forecasting; proposal

generation and management; pricing; territory assignment and management; and expense

reporting.

Marketing applications

These include web based and traditional marketing campaign planning, execution, and

analysis; listgeneration and management; budgeting and forecasting; collateral generation

and marketing materials management.

Customer service and support applications

7/27/2019 CRM (100 MARKS).doc

29/68- 29 -

These include customer care; incident, defect and order tracking; field service; problem

and solution database; repair scheduling and dispatching; service agreements and

contracts; and service request management.

Given below is a brief review of what some of the known vendors in this area have in

their applications for these verticals. The table 2 at the end gives comparative assessment

of the products discussed below for the above verticals:

SIEBEL

It continues to out market and out sell the competition. It is one of the few front office

suite vendors having vertical specific functions. Its functionality is compelling. It can be

integrated with most of the back office solution like SAP and Oracle. It has solutions for

automotive, public sector (US), communications, consumer goods, apparel and footwear,

energy, finance, insurance, health care, life sciences and high technology industry sectors.

The solutions for the verticals described above are discussed below:

For Consumer goods: a Siebel e Consumer goods offers e Business solution spanning

the entire demand chain from the end consumer, through the retailer and the

wholesaler, to the manufacturer. It has robust trade promotions planning

functionality allowing users to manage customer promotion plans and the funds to

support them, while comprehensive route planning functionality enables integrated

account targeting. Using Siebel e Consumer Goods, organizations can also identify

customer-buying behaviors and translate this understanding into new trade

promotions and product offerings

For Financial Services: Siebel e Finance enables banking, brokerage, insurance, and

capital market or generations to establish and maintain long term profitable

relationship with consumers, small businesses, and corporate customers. The

organizations can capitalize on information captured during each customer

interaction to more effectively cross-sell and up-sell additional products and services.Additionally, Siebel e Finance provides a comprehensive view of the entire customer

relationship across multiple product lines, enabling financial service organizations to

provide a personalized experience across all channels.

For Healthcare: Siebel e Healthcare gives organizations the ability to streamline and

improve sales, member services, medical management, and network management

7/27/2019 CRM (100 MARKS).doc

30/68- 30 -

services. By using multiple distribution channels, including the Internet, call Centers,

home office staff and independent brokers, Siebel e Healthcare provides

organizations with a single view of their customers, thereby ensuring better service

and improved quality of care.

For telecom service providers: Siebel e Communications helps wireless, cable, and

Internet service providers to target and win the right customers, accelerate service

delivery, and provide service across all touch points. Siebel e Communications

embodies the industrys best practices for generating accurate service orders,

managing billing inquiries and adjustments, and up-selling and cross-selling

additional services. By using Siebel e Communications integration technology,

service representatives and salespeople can instantly access information such as

billing, order management, and network management from Operation Support

Systems (OSS), to deliver highly responsive customer support and significantly

increase sales.

Siebel 99, the vendor's major release, boasts 117 applications that span sales and service

and incorporate multiple vertical markets.A major effort in the new application release is it integrates all the channels companies

use to contact customers: Web, E-mail, voice, wireless and face-to-face contact.

Some of Siebel employee-

facing applications are:

Some of Siebel customer-

facing applications are:

Some of the additional products

available in version 6.0

Siebel Call Center Siebel e ChannelSiebel e Business Connector for SAP

R/3

Siebel e Mail Response Siebel e Customer Siebel Communications Server

Siebel Field Service Siebel e Marketing Siebel Distance Learning

Siebel Marketing Siebel e Sales Siebel Global Enterprise Support

Siebel Sales Siebel eService Siebel Language Extensions

Siebel Service Siebel Wireless

Clarify

It offers customer service & support and field service suite; however its sales

functionality is immature.

Oracle

7/27/2019 CRM (100 MARKS).doc

31/68- 31 -

Oracle is betting everything on its thin, Web Based, centralized computing model. The

Internet computing architecture is compelling for connected non-mobile users; Oracle is

rebuilding functionality on the new platform and integrates its various acquired products.

It offers a broad set of functionality across e-commerce, front office and business

intelligence applications.

Vantive

Vantive offers a compelling customer service and support and field service suite. The rest

of its front office functionality makes it suite more of a bundle. The solution is integrated

with PeopleSoft at the back office.

Some frequent modules that most CRM have is:

Forecast Management, Encyclopedia Management, Campaign Management, Brand

Management, Opportunity Management, and Event Management.

CRM solutions are intertwined combinations of technology and business processes. In

order to be effective CRM service providers will need a balanced understanding of both

products and services. Its necessary to have an expertise in not CRM technology but also

customer service processes.

The potential use of CRM lies in it being the leading indicator of future revenue than just

being used as a customer facing transaction-processing tool or as a lagging indicator

communicating past consumer grievances.

The complete concept of CRM can be mapped on a technology solution as per the

following blue print. The databases feed the technology infrastructure which links You

with the customer touch points.

Thus we have four components of a CRM initiative rollout

Customer Value Management Strategy

CRM roadmap keeping in mind industry nuances

Database solutions

Customer access channels

7/27/2019 CRM (100 MARKS).doc

32/68- 32 -

Case Study 1: Implementing a Technology-

Based CRM Solution

The ICICI Experience

ICICI set up as Development Bank over four decades ago to provide products and

services for the corporate segment, diversified into the retail segment of the financial

markets in the early 1990s.

In 1994, it established ICICI bank as a commercial bank that is flexible, innovative and

prompt in meeting customer requirements. In addition to the bank, the retail initiatives

include Prudential ICICI AMC, ICICI Personal Financial Services, ICICI Capital

Services, and ICICI web trade, Prudential ICICI Life Insurance, ICICI Lombard Generalinsurance. This apart the retail initiatives also include a plethora of web based businesses

including city portals and various other utility sites such as billjunction.com,

icicimoneymanager.com, and magiccart.com, among others.

The Retail Strategy

As part of plans, it is implementing various projects to establish world class CRM

practices, which would provide an integrated view of its customers to everyone in the

organization. CRM at ICICI involves increased communication between the virtual

universal bank and its customers and prospects, as well as within the group itself. The

underlying idea is to enhance every instance of contact with the customer. ICICI believes

that a true customer centric relationship can only be accomplished by considering the

unique perspectives of every single customer of the organization. Hence the pressing

need to put in place a technology enabled CRM solution.

7/27/2019 CRM (100 MARKS).doc

33/68- 33 -

The CRM Roadmap

CRM, at ICICI, is viewed as a discipline as well as a set of discrete software

technologies, which will focus on automating and improving the business processes

associated with the customer face to-face, call Centre, ATM, web, telephone, kiosk,

bank branch, sales associates, etc so as to allow ICICI to carry out cradle-to-grave

customer management more efficiently. It should allow ICICI to engage in one-to-one

marketing by tracking complete customer life-cycle history. To begin with it will

automate process-flow tracking in the product sales process, and be able to generate

customized reports and promote cross selling. It will also enable efficient campaign

management by providing a software interface for definition, tracking, execution, and

analysis of campaigns.

From an architecture perspective, the enterprise-wide CRM solution should seamlessly

integrate non-transactional related customer information housed in the front-office with

the transactional information housed in the back office.

Implementing CRM

A very detailed and comprehensive CRM action plan was developed based on the

understanding that CRM will require enterprise wide transformation.

The CRM Business Transformation Map below shows the various aspects of that change.

Product Sales Channel Marketing Service Customer

Product

Management

Place

Management

Promotion

Management

Channel

Management

Contact

Management

Customer

Management

Product

Performance

Place

Performance

Program

Performance

Customer

Revenues

CustomerPatterns &

Profitability

Customer

Lifetime Value

and Loyalty

BUSINESS FOCUS

ORGANISATIONAL STRUCTURE

BUSINESS METRICS

MARKETING FOCUS

7/27/2019 CRM (100 MARKS).doc

34/68- 34 -

Mass

Advertising

Sales

Promotion

Marketing

Campaigns

Integrated Marketing

Communications

Segment

Specific

Marketing

CRM

Transaction

Processing

Data

Maintenance

Data Access Data Warehouse Data Marts Customer

Touch point

Systems

Source: How to Get There from Here by Melinda Nykamp, President, Nykamp Consulting group

Interviews with key individuals throughout the organization helped identify different

initiatives that have been launched, all focused on CRM.

The next step in the planning process was a Gap Analysis. This analysis essentially

compared current stage against optimal relative to the five aspects of business, to identify

and specifically describe the gaps.

The CRM Business Cycle:

Understand and Differentiate

Organizations cannot have a relationship with the customer unless they understand

them what they value, what types of services are important to them, how and when

they like to interact, and what they wan to buy. True understanding is based on a

combination of detailed analysis and interaction. ICICI groups customers need to see

that the company is differentiating service and communication based on both what they

have learned independently and on what the customer has told them. At the same time,

differentiation should be based on the value customer are expected to deliver.

Develop and Customize

ICICI believes that the extent of customization should be based on the potential value

delivered by the customer segment.

Interact and Deliver

ICICI is strongly of the opinion that value is not just based on the price of the product or

the discounts offered. In fact, customer perceptions of value are based on a number of

factors including the quality of products and service, convenience, speed, ease of use,

responsiveness, and service excellence.

Acquire and Retain

TECHNOLOGY

7/27/2019 CRM (100 MARKS).doc

35/68- 35 -

The more ICICI learns about customers, the easier it is to pinpoint those that are

producing the greatest value for the organization. Successful customer retention basically

involves getting it right on an ongoing basis. And that is exactly what ICICI group aims

to achieve out of its CRM initiatives.

Successful customer retention is based very simply on the organizations ability to

constantly deliver on three principles:

Maintain interaction; never stop listening to customers

Deliver on customers value definition. Remember that customers change as they

move through differing life stages; be alert for the changes and be prepared to modify

the service and value proposition as they change.

Prioritizing Changes

Because there might be many gaps, therefore many changes that an organization

will need to make, prioritization was critical. The evaluation of each of the

strategies identified to resolve the gaps at ICICI were based on:

Cost to implement including initial one time costs, as well as anticipated ongoing

expenses.

Overall benefit some changes may have higher impacts on an organizations ability

to increase customer value and loyalty.

Feasibility based on the organization readiness, data and systems support, resource

skill sets and a number of other factors.

Time Required including the time necessary for training and addressing cultural

change management issues related to a specific strategy

Creating an Action Plan

The next step in the planning process was the development of a very detailed

action plan. While the complete plan might span three or more years, it was based

on three-month phases with clear deliverables that will demonstrate both progressand quick hits or measures of success. The plan identified interdependent

activities and should comprehensively detail the time and resources required for

each activity.

Another key factor for the planning process was the Leadership Action Plan.

Advancing on the CRM transformation map required significant organization

7/27/2019 CRM (100 MARKS).doc

36/68- 36 -

change. This part of the action plan helped assess the drivers and restraints of

change and the organizations readiness to assess the change.

Selecting and Implementing a Technology Based Solution

Technology

The successes of the CRM initiatives were contingent on various decisions pertaining to

technology. Some of the key issues were: -

(a) Make or Buy: - The decision to buy was based on an evaluation of an identified set of

criteria. Some criteria were Functionality, Flexibility, Scalability, Fit with existing

architecture, etc. was decided to purchase an off-the-shelf CRM solution and

customize it to suit ICICIs requirements.

(b) From whom to buy: Some Criteria included were CRM expertise, Retail Finance

Experience, Credentials including financials, client list, life history, etc. A detailed

Request for Information (RFI) was sent to each of the short listed companies. After

receiving the RFIs, another round of evaluation was done. After short listing two

product vendors and system integrators, reference calls were made to several of the

past clients of all shortlisted companies.

Processes

All processes were mapped on to product by understanding the details. During the course

of the process mapping, several opportunities for improvement were identified and

implemented.

The Sales Process Pre CRM and Post Implementation of CRM

Call Centre Sales Agent Scrutiny Credit Agent Operations

Independent Databases

Database

Call Centre Sales Agent Scrutiny Credit Agent Operations

7/27/2019 CRM (100 MARKS).doc

37/68- 37 -

Lessons so far from the ICICI experience

If CRM involves optimizing product, price, place of distribution, promotion, sales and

service, why are so many companies struggling? Hasnt anyone really mastered the art

and science of CRM, and if not, why is it so difficult?

CRM is difficult because it is an enterprise wide initiative.

CRM is not a technology initiative. Many have confused CRM as a technology

initiative, and assigned the CRM implementation project to their information system or

information technology group. CRM conferences often equate to technology exhibits

and demonstrations. Technology is needed in order to implement CRM particularly the

customization part but technology is not the driver of CRM, or the solution to

successful CRM implementation.

CRM is not exclusively a marketing initiative. Many organisation have merely

equated CRM with customer focused marketing, or data-driven/database marketing.

CRM results in more effective, data driven marketing efforts; CRM requires marketing

experience. But CRM is strictly not a marketing initiative.

CRM is not exclusively a sales initiative. Similar to marketing, CRM is often lodged

within the sales department. The sales-force, after all, is extremely close to their

customersunderstanding their needs and wants., and trying to fulfill them. Sales,

however, is just one functional area that can benefit from CRM, and that is necessary for

effective CRM.

CRM is not exclusively a service initiative. As with sales and marketing, customer

service is one functional aspect of successful CRM implementation. But customer

service is not the sole driver of the process.

CRM involves marketing, sales, service, and technology, as well as the other inner

workings of the organization. Having even one broken spoke in the wheel. one area of

7/27/2019 CRM (100 MARKS).doc

38/68- 38 -

the organization that is less than committed to CRM can make the difference between

success and failure.

Case Study 2: Building Relationship with Doctors

For Effective Marketing

The Case of the Pharmaceutical Industry

Introduction

The Indian Pharmaceutical market is worth approx. Rs. 140000 million growing at a

healthy 10%. There are around 16,000 players both in the organized and the unorganized

market vying for a piece of this pie. It is a very fragmented market with the number one

player, Glaxo Welcome, having a market share of 5.8%. Infact the combined of the top 5

companies does not exceed 20%. Earlier MNCs used to sell on the quality plank but

today quality is a table stake condition where even the smallest player is able to meet the

highest quality norms.

Doctor Population

There are approximately 500,000 doctors in India who are registered with the Indian

Medical Association. The largest of the pharmaceutical companies cannot meet more

than 125,000 of this doctor population. As a result most of the doctors are being met by

atleast 60-100 companies.

Out of the total doctor population as much as 60-65% are general practitioners within the

basic MBBS degree. The higher specialties constitute the remaining 35-40%.

Promotion

In an ethical market product promotion is directed solely to the qualified directors. No

advertising mentioning the brand names is allowed in the lay press. The medical

representative (MR) is the major means of promotion though other media like direct mail,

journal advertising, conferences, also play a role albeit a limited one.

7/27/2019 CRM (100 MARKS).doc

39/68- 39 -

Starting a CRM initiative

Having understood the major characteristics of the industry, the identification,

differentiation, interaction and customization (IDIC), model as suggested by Don Peppers

and Martha Rogers would be used to understand the steps to a CRM initiative.

Identification

The first step towards any CRM initiative is identification of the customer. Each medical

representative maintains a list of doctors in his area. This list is generated through

interviews with stockiest, retailers, as well as his peers from other companies. The list

called the MSL (must see list), MVL (Must Visit List), Customer list, etc typically lists

the name, address, telephone no., specialty, qualification, visit timings, and other basic

data of the doctor. The key driver for a CRM program is integration of this data from all

the MRs to a central database.

The next step is to add to this data by collecting details from other sources like

Membership directories of association: Almost all cities have their branches of the

Indian Medical Associations (IMA). These have a directory of all their members listing

their contact details and some personal information. These are a good source to begin

with but most are updated at very long intervals and hence the veracity of the data has to

be checked. Similarly, there are individual associations for almost all the specialties

whose membership directories are also easily available.

List of conference participants: each specialty of doctor organizes a national level

conference every year where members from all over the country attend. Details can becollected through the sponsorship of the front-desk; organizing contests, or distributing

give always in exchange for information.

Doctors Referral: Another route would be akin to a member get member scheme

wherein doctors would be encouraged to refer follow practitioners.

7/27/2019 CRM (100 MARKS).doc

40/68- 40 -

Thus a semblance of a database would take shape. The term is a misnomer, since at best

it is a customer list, as it contains nothing more than contact information along with some

basic information. But nevertheless it is a starting point.

The database at no stage can be termed as final as collection of doctor details is an

ongoing process. Continues additions, updating and deletions are always taking place.

The list cam be mined for details of specialty wise break-up, geographical coverage etc,

to serve as a tool for the marketing decision making process.

Differentiation

The success of any loyalty program lies in differentiating the key customers. Typically, a

MSR would classify his doctors using the ABC Method as core, important and others

based on the amount of business he gets.(or expects to get) from them. The number of

sub-classes would vary but the principle would be the same. In a typical pyramidal

fashion the top-rung doctors who are the least in number would be commercially most

important and the importance would linearly decrease as one goes down the pyramid. The

numbers would propotionately increase as per the Pareto principle.

The point to be borne in mind is that the whole basis of diffrentiation is being done on

very subjective terms of the perception of the local MR unlike other industries viz.

Airlines, who would classify frequent fliers based on data collected from reservation.

Since there is no formal mechanism of capturing data about the revenue generated from a

doctor, the MR is the sole and final judge.

Thus the database formed is step one, can be now classified into the important doctors

and the not so important ones.

Interaction

Now comes the stage of building on the database collected and refined in the above 2

stages. The basic idea now is to build on the data collected in the first stage. The idea is

get to know the doctor intimately. His hobbies, likes, dislikes, family details,etc. The

fundamental premise being that the doctor is as human as anybody else is and hence we

should recognise his individuality. It is of utmost important that it is decided beforehand

what kind of information would be collected and much more importantly how it will be

used.

Interaction can be done at two levels:

7/27/2019 CRM (100 MARKS).doc

41/68- 41 -

Firstly, personally at the MR level: the most productive would be using human

intervention. The MR can easily collect most of the information from his day to day

interaction with his customers. Alternatively a formal structured questionnaire can also

be administered.The biggest hurdle to this approach is not surprisingly enough the MR. A level of

conviction has to e brought into him that the data he would collect would actually be used

and more importantly will help him do his job better. Numerous instances abound of

companies who have gone about collecting loads of information on their doctors through

their MRs and finally not using them at all.

Secondly. Direct at the corporate level. : The structured questionnaires requesting

further details can also be mailed to doctors with each response entitled to a token gift,

etc. This approach typically would yield a lower rate of return but the quality of

information would be superior to the first approach as it is coming directly from the

doctor. The information collected is then incorporated to the basic database earlier

formed. Just to give an idea of the type of information collected by companies consider

the following:

Personal information : date of birth, marriage anniversary, details of children,

qualification and experience, etc

Hobbies and Interests: Activities during spare time, tv channels watched, general

interest, magazines read, favorite vacation destinations, etc

Professional Interests: Type and name of medical journals read, professional

membership of associations, attendance at national conferences, etc

Ownership Details: Household durables owned, vehicle ownership, etc

Companies have been able to collect enormous amount of such data, through either of the

means elaborated earlier. What is important to note that they have been able to

demonstrate their sincerity in actually using this data.

Customization

This is the time to start using the data. The easiest and the most preliminary step is to

start greeting the doctor on his birthday and marriage anniversary. From a simple card

personally signed to a personal phone call from the head office anywhere in the country

7/27/2019 CRM (100 MARKS).doc

42/68- 42 -

to a birthday cake being actually presented are some of the ideas. Even bouquets can be

delivered at the doorstep. A company even arranges for the doctor to have dinner with

spouse on their marriage anniversary, with the tab taken care of course!

But more important to customize the interaction with the doctor based on the data we

have on him. Gifts based on the interests and hobbies can be presented. If a doctor has

expressed interest in national conferences of his specialty the same can be arranged.

The success of the whole programmedd hinges on how well can the companies pass on

the data of the doctor to their field force and train them on how to use this data. He is

actually the man of the moment. It is necessary that the information received on an

interaction be fed into the system so that it can be used for the next interaction. A sort of

master-database can be generated which would recover every contact with a doctor

through the field, mail, telephone, web, etc. this master database would be the key driver

to foster a learning relationship.

Loyalty Programmed

The next obvious step is to have a loyalty programmed as a frequency marketing

initiative. An ideal loyalty programmed would be able to identify its key accounts,

reward them for their custom and encourage them to increase their spend.

This concept in case of the pharmaceutical industry has a twist since the customer (the

doctor) is not the actual consumer (the patient) of the product. Thus there are ethical

issues involved in rewarding points in return for prescriptions One cannot have a reward

programmed based on the redemption of these points.

One approach would be to set the whole programmed based on the classification into

which the doctor falls. Thus the lowest rung would be restricted to the basic of activities.

The number and the level of activities would increase as the important of the doctor

grows. A branded programmed can be started for the most important doctors. It is

important that it is clearly defined at the onset what will be the objective of the

programmed and more importantly convey the exclusivity of the programmed. The

doctor has to be made to realize that he is the chosen one. All activities and inputs

should only reinforce this communication.

The success of such a programmed hinges on making the doctor covet the membership to

the programmed. Thus a continues monitoring is required of the returns generated from

7/27/2019 CRM (100 MARKS).doc

43/68- 43 -

the doctor. If they fall below a predefined limit then the doctor can be downgraded and

his privileges reduce.

Direct Marketing

It is a valuable tool for effective CRM. Since a captive database has been put into place it

can easily lend itself to direct marketing initiatives. As the primary fields captured are the

contact address a program through mail is easiest to accomplish. Brand awareness

mailers, new launches, contests all can be conducted by mail. Information technology has

several advantages

It is very cost effective: A large audience can be touched at a relatively cheaper cost

as compared to personal selling.

It can be targeted and specific to the right target audience in term of specialization or

geographical area.

It is measurable with use of reply devices one can immediately gauge the efficacy of

a campaign. In fact since the target audience for a brand is usually sharply defined in

terms of their specialization e.g. An allergy product to ENTs, Dermatologists and GPs,

the response received is usually much higher then that accepted as a norm in other

industries. A response of 15-20% can be easily achieved through such communications.

Most of the pharmaceutical companies have realized the advantages of this mode of

communication. The primary rationale is to save the time of the field by promoting the

low involvement (for the doctor) products, promote brand recall for a new product,

exploit alternative avenues for brand promotion etc.

Apart from mail other DM media like telemarketing and web have also been tried. While

telemarketing has been tried for promoting new launches to get instant feedbacks the web

has still to achieve its potential. The PC penetration in India is still very low which

handicaps the growth of this mode. Using the e-mail to correspond and interact withdoctors is being tried. It is especially useful for targeting higher specialties, which is more

technology savvy and information hungry.

Measurement Systems

The measurement system would require studying the prescription profile of the doctors

who are being exposed to the CRM programmed vis a vis a control sample who are met

7/27/2019 CRM (100 MARKS).doc

44/68- 44 -

by the field force but not exposed to CRM activities. The prescription given by the

doctors can be studied over a particular time frame and the amount of prescriptions

before exposure to the programmed can be measured. The idea is to check if the

prescription levels have increased after the doctor has been made the member of the

loyalty programmed. This method would at best provide a qualitative idea but would

nevertheless give an idea of the success or failure of the programmed.

Conclusion

The importance of internally marketing the CRM programmed is very important. The

success of the whole programmed hinges on the support of the top management who can

act as a mentor. The programmed takes time to take off and much more time to actually

show results.

7/27/2019 CRM (100 MARKS).doc

45/68- 45 -

Case Study 3: Relationship Building in

Cement Marketing

The Case of Indian