crm chapter1

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Chapter -I stomer Relationship Management (CR earning Objectives fine CRM; derstand the importance of CRM; plain the determinants of CRM and the key stages in its devel scuss the main functions and various models of CRM; plain the role of salespeople as relationship developers scuss the management of customer relationships.

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Page 1: CRM Chapter1

Chapter -ICustomer Relationship Management (CRM)

Learning Objectives

Define CRM;

Understand the importance of CRM;

Explain the determinants of CRM and the key stages in its development;

Discuss the main functions and various models of CRM;

Explain the role of salespeople as relationship developers

Discuss the management of customer relationships.

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Customer Relationship Management (CRM)

What is Customer Relationship Management (CRM)?

CRM is “the development and maintenance of mutually beneficial long-term relationships with strategically significant customers”

(Buttle, 2000)

CRM is “an IT enhanced value process, which identifies, develops,integrates and focuses the various competencies of the firm to the‘voice’ of the customer in order to deliver long-term superiorcustomer value, at a profit to well identified existing and potentialcustomers”.

(Plakoyiannaki and Tzokas, 2001)

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Customer Relationship Management (CRM)

Understanding Customer Relationship Management (CRM)?

CRM is a business philosophy based on upon individual customers and customised products and services supported by open lines of communication and feedback from the participating firms that mutually benefit both buying and selling organisations.

The buying and selling firms enter into a “learning relationship”, with the customer being willing to collaborate with the seller and grow as a loyal customer. In return,, the seller works to maximize the value of the relationship for the customer’s benefit.

In short, CRM provides selling organisations with the platform to obtain a competitive advantage by embracing customer needs and building value-driven long-term relationships.

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Customer Relationship Management (CRM)

Determinants of CRM

Trust

The willingness to rely on the ability, integrity, and motivation of one company to serve the needs of the other company as agreed

upon implicitly and explicitly.

Value

The ability of a selling organisation to satisfy the needs of the customer at a comparatively lower cost or higher benefit than

that offered by competitors and measured in monetary, temporal, functional and psychological terms.

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Customer Relationship Management (CRM)

Determinants of CRM

In addition to trust and value, salespeople must:

Understand customer needs and problems;

Meet their commitments;

Provide superior after sales support;

Make sure that the customer is always told the truth (must be honest); and

Have a passionate interest in establishing and retaining a long-term relationship (e.g., have long-term perspective).

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Customer Relationship Management (CRM)

Stages in the development of a Customer Relationship

The Pre-relationship StageThe event that triggers a buyer to seek a new business partner.

The Early StageExperience is accumulated between the buyer and seller although a great degree of uncertainty and distance exists.

The Development StageIncreased levels of transactions lead to a higher degree of commitment andthe distance is reduced to a social exchange.

The Long-term StageCharacterised by the companies’ mutual importance to each other.

The Final StageThe interaction between the companies becomes institutionalized.

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Customer Relationship Management (CRM)

Stages in the Development of a Key-Account Relationship

Degree ofinvolvement

High

Low

Nature of customer relationship

Transactional Collaborative

Pre-KAM

Early-KAM

Mid-KAM

Partnership

Synergistic KAM

(Millman and Wilson, 1995)

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Customer Relationship Management (CRM)

A Relationship Life Cycle Model

High cooperationLow competition

Low cooperationHigh competition

Time

Pre-relationship

stage

Developmentstage

Maturitystage

Declinestage

(Wilkinson and Young, 1997)

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Customer Relationship Management (CRM)

Class Exercise

What should the focus and main activities of a global salesperson be in each stage of the relationship development process?

Why? (Please justify your answer)

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Customer Relationship Management (CRM)

Functions of Customer Relationship Management

Direct functions (are the basic requirements of a company that are necessary to survive in the competitive marketplace)

Profit; Volume; and Safeguard

Indirect functions (are the actions necessary to convince the customer to participate in various marketing activities).

Innovation: Market; Scout: and Access.

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Customer Relationship Management (CRM)

Functions of Customer Relationship Management

Management DecisionProcess

Customer sensitivity

•Diversity•Information•Differentiated offering

Value Creation Process

Technology delivery process•R&D•Technology integration•Efficiency, effectiveness learning

Product delivery process•Concept to launch•Manufacturing process

Customer delivery process•Supply chain•Distribution•Infomediation (distribution of information)

Value-basedStrategies•Pricing•Communication

(Sharma et. al., 2001)

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Customer Relationship Management (CRM)

The role of salespeople as relationship builders and promoters

Salespeople by:

identifying potential customers and their needs;approaching key decision makers in the buying firm;negotiating and advancing dialogue and mutual trust;coordinating the cooperation between the customers and

their company;encouraging the inter-organisational learning process; contributing to constructive resolution of existing conflicts; andleading the customer relationship development team

are the individuals in any organisation who act both as relationship builders and as relationship promoters.

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Customer Relationship Management (CRM)

Models of Customer Relationship Management

The Evans and Luskin (1994) model for effectiveRelationship Marketing

Relationship marketing inputs•Understanding customer expectations•Building service partnerships•Empowering employees•Total quality management

Relationship marketing outcomes•Customer Satisfaction•Customer loyalty•Quality products•Increased profitability

Assessment state•Customer feedback•Integration

(Evans and Luskin, 1994)

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Customer Relationship Management (CRM)

Models of Customer Relationship Management

The Brock and Barcklay (1999) model of sellingpartner relationship effectiveness

Independence

Relative influence

Mutual trust

Cooperation

Selling partnerrelationshipeffectiveness

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Customer Relationship Management (CRM)

Managing Customer Relationships

The global salesperson must be involved in the following activities in order to initiate, develop and enhance the process that is aimed at building trust and commitment with the customer.

Initiating the relationship

Engage in strategic prospecting and qualifying;

Gather and study pre-call information;

Identify buying influences;

Plan the initial sales call;

Demonstrate an understanding of the customer’s needs;

Identify opportunities to build a relationship; and

Illustrate the value of a relationship with the customer

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Customer Relationship Management (CRM)

Managing Customer Relationships

The global salesperson must be involved in the following activities in order to initiate, develop and enhance the process that is aimed at building trust and commitment with the customer.

Developing the relationship

Select an appropriate offering;

Customise the relationship;

Link the solutions with the customer’s needs;

Discuss customer concerns;

Summarize the solution to confirm benefits; and

Secure commitment.

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Customer Relationship Management (CRM)

Managing Customer Relationships

The global salesperson must be involved in the following activities in order to initiate, develop and enhance the process that is aimed at building trust and commitment with the customer.

Enhancing the relationship

Assess customer satisfaction;

Take action to ensure satisfaction;

Maintain open, two-way communication; and

Work to add value and enhance mutual opportunities.

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Why CRM is crucial to your organization

• CRM Boosts Overall Development: CRM on account of its acute involvement in marketing, sales and service manages to sustain and increase customer retention.

• Why use CRM? This undying philosophy has proven to be beneficial in overall cost reduction, better management strategies and enhancement of sales. Mass marketing is made possible on account of the increased focus placed on marketing functions.

• Customer relationship management tools enable an organization to work in a competitive environment and manage to supersede competitor efforts with its customer centric approach. It carefully studies customer attitudes and ingrains customized approaches in the business activities.

• From Strategy to Results-CRM Vital: The primary step in CRM implementation involves a sound business philosophy with customer satisfaction and learning at the focal point. After this comes the actual implementation itself whereby technological.

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• processes are used to convert this philosophy into results. CRM is the bed for this launch. It enables this act and facilitates a better understanding between the customer and the organization

• It manages to cultivate a one on one relationship with its end users. Strengthening a relationship with long standing customers is more than beneficial because almost 80% of profits are actually generated from loyal customers.

• CRM ensures that the organization pays adequate attention to customer ideas. It instills the idea that these end users- customers are highly essential to success and focuses on the organizations need to study their behavioral patterns.

• Why use CRM? CRM basics studies customer responses and uses it to identify the market trends and then uses this information to advocate marketing plans. CRM with its use of software analyzes and assimilates customer data so as to study purchasing patterns..

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• This clearly indicates to the organization what means of communication to the customer is most effective. Irrespective of what is used CRM does reward

• CRM Facilitates Customer Loyalty :Since CRM constantly serves to keep a tag on what a customer is buying, these opportunities can be utilized to encourage sales leads. Slipping in at the time of purchase with an offer of discount on another purchase induces him to purchase further.

• CRM is basically a highly developed marketing strategy that uses the organizations resources by delivering personal messages to a target audience. This target audience is generally the most profitable customers.

• CRM also serves to measure the effectiveness of marketing campaigns. Customer relationships are the back bone of an organization and are essential to almost all departments. CRM

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manages to turn an organization image into one of warmth and portrays a customer friendly attitude to its users.

• CRM enables organizations to deal out better customer care, one that is more personalized. Customer relationship management seeks to encourage better marketing effectiveness and helps in identifying potential customers

• CRM's impact on the world has been phenomenal .Customer service sectors are proof of this growth. As companies opt for CRM strategies, the ones who haven't will lose the competitive edge.

• Why use CRM? CRM tends to get hold of peoples potential and uses

this to make the customer service experience of its customers much better. Statistics state that CRM is implemented in almost 30 % of American companies. The estimated amount that is likely to be poured into the CRM industry is $90 million. With such staggering statistics it is but right for those who haven't opted for it to do so.

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CRM Benefits - How much do organizations stand to gain?

• The popularity of CRM is due to its fundamental and increased focus on customers. CRM benefits include its ability to help to ensure excellent customer service as it is aware of customer needs and is able to react to them effectively. It enables an organization to anticipate and respond to its customers needs in the right way.

• It is a business strategy that applies to almost every organization; therefore almost all organizations stand to gain from its use.

• Customers are motivated to return again and again as they receive good customer service and continue to do business

• Since acquiring a new customer is far more costly than retaining an existing customer more and more companies are turning to CRM as it is able to achieve this. Companies need this in order to stay competitive.

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• Many forms of advertising are not as effective as they need to be. CRM enables a company to target their audience more precisely and gain customer retention, all at a lesser cost. CRM helps your business as it lets you do more for your customer and gain more from them.

• Since every organization needs to understand the importance of cross-selling and since CRM does that they are able retain their customers for longer periods

• CRM delivers company-wide access to customer information.

• Using CRM applications can lead to increases in revenue from almost all areas.

• Reductions in operating costs is a by product of CRM implementation.

• Simplification of marketing and sales processes is achieved in organizations implementing CRM by their understanding of customer needs

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• Better customer service is achieved through improved responsiveness and understanding. This builds customer loyalty and decreases customer loss.

• CRM enables a company to build a database about its customers so that management, salespeople etc could access information, match customer needs with plans and offerings, render better customer service etc.

• It enables an organization to create detailed profiles such as customer likes/dislikes etc.

• CRM gains the trust of customers by meeting their needs in a more personalized way

• CRM delivers personalized, informed service that customers expect. This is because of a system that contains and provides a complete profile of the customer, including all past and present behavior patterns.

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• A higher percentage of cross-selling is possible in companies opting for CRM

• With globalization CRM offers companies a chance at increased customer loyalty, higher margins and customer retention

• Companies achieve more success in attracting new customer on account of their quicker and more efficient responses to customer leads and customer information.

• CRM helps an organization to develop better communication channels

• CRM helps an organization to collect vital data, like customer details etc. This data can be used for customer interaction.

• Companies opting for CRM find it easy to identify new selling

opportunities.• The traditional systems used by Customer Service, Sales and Marketing

can now be done away with and the gaps filled with CRM implementation

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Customer Relationship Management (CRM)

Managing Customer Relationships

(QPR)Qualifying prospects for relationship building

Opportunities for adding value

Potential profitability of customer

High

Low

Low High

Use a noncustomizedapproach

Seek betteropportunities

elsewhere

Build a strongand lastingrelationship

Focus onloyalty-building

program

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• This relationship matrix method is based on the relationship life cycle theory that can be used to determine what priorities should be given in managing customer relationships. To ensure long-term profitability and value creation, a company should focus on building a strong and lasting relationship for continuous growth in terms of value and profit

• It has 2 dimensions: Potential profitability of customer and opportunities for adding value. The basic idea behind the matrix is that the customer having highest potential profitability and which gives the highest opportunities for adding value the better it is for the company. 

• Placing profitability/opportunities in the matrix results in 4 approaches in the qualifying prospects for relationship building of a company: 

• 1. Build a Strong and lasting relationship (=high profitability, high opportunity for adding value).

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• - use large amounts of cash and are leaders in the business so they should also generate large amounts of cash.-Opportunity for adding values is very high. If needed any attempt   should be made to acquire or retain the customer, because the rewards will be a very high if a relationship is maintained.

• 2. Focus on loyalty-building program (=high profitability, low opportunity for adding value).- Profits and cash generation should be high, and because of the low potential for adding values and growth, investments would be done                     

• 3. Use a non customized approach (= low profitability, High opportunity for adding value). - have the worst relationship characteristics of all, because low potential profitability and high opportunity for adding values.   

• --avoid and minimize the number of such relationships with a company.

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• 4. Seek better opportunities elsewhere. (=low growth, low market share).- beware of any new plans for value building.- Efforts should be made to get out of the relationship as these companies will simply absorb great amounts of time and effort.

• Some limitations of the Relationship Matrix include:

• 1.      It all depends on the potential profitability with/without considering the dynamic nature of market/client.

• 2.      Sometime the value received from low profitability customers are more than High profitability customer. The values in the form of experience and knowledge transfer.

• The QPR (qualifying prospects relationship building) matrix – This graph describes the qualifying prospects for relationship building depending upon the opportunities for adding value and potential profitability of customer from the relationship.

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Customer Relationship Management (CRM)

Relationship networks

The ultimate outcome of a successful CRM strategy is the creationof a unique company asset known as a relationship network.

A relationship network consists of the company and its major customers with whom the company has established long and enduring business relationships.

The additional aspects of a global salesperson’s job are to:

Manage customer value;Act as customer advocate; andEnhance customer loyalty and build a “health” and

profitable network of relationships.

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Customer Relationship Management (CRM)

Summary

CRM is a new business philosophy based on trust and value;

The core function of CRM is the value creation process;

Customer relationships develop over time;

The role of global salespeople in the process is that of both relationship builders and relationship promoters; and

The basic premise of CRM is to offer superior value to customers in an effort to turn prospects into customers, customers into loyal customers, and loyal customers into partners.

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Building Effective CRM Capabilities12 steps that companies must ensure to build effective CRM

capabilities. 1. Clearly define vision and develop actionable strategies regarding

customer relationships

• It is imperative to have a clear vision about what kind of a relationship structure a company wants to build with its customers and what actionable strategies would yield that structure. For example, if a bank wants to build a very personal relationship with customers an actionable strategy would be to enable them to have 24-hour access to bank personnel, which could be executed by increasing branch banking hours or providing 24-hour access to a call center. Having a noble, but vague vision like we are going to be perceived as the customer-friendly bank does not lead to actionable strategies. It is critical to determine both the vision and actionable strategies before investing in any CRM

infrastructure.

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2. Gain consensus in the company regarding CRM.

• It is quite common to find within companies that departmental or business unit goals do not align with overall corporate goals. It is imperative that management agrees on a common customer vision and strategies, and review department and business unit strategies to ensure everyone is working towards a common goal. This alignment is critical to orient the functioning of all departments and business units toward the goals of increasing customer retention, loyalty, and profitability.

3. Establish measurable business goals.

• Companies cannot ascertain the effectiveness of CRM projects unless they put measurable goals in place. Examples of metrics for CRM projects are customer churn rate, average revenue per customer, and customer profitability. A recent study of insurance companies, banks, and other financial institutions revealed that

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60 per cent of respondents did not have a way to measure whether a CRM project was delivering a return, and 50 percent were unable to determine whether customer churn had increased or decreased after implementing CRM.

• 4. Get top executive support up front.Once an organization sets a common vision and actionable customer strategies, achieves enterprise wide alignment, and establishes metrics, it is ready to implement a CRM solution. However, before embarking on an implementation project, it is essential that top executives of the company are squarely behind the project and send a clear signal to the enterprise that the project is a key element of the company's overall business strategy. They also need to emphasize that this initiative will benefit each and every customer, employee, and shareholder.

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5. Get end user buy-in up front and maintain it.Implementing a CRM initiative without buy-in across all facets of the enterprise is almost always a recipe for failure. The more people involved, the better the acceptance of the initiative and the higher the chances for success. And although obtaining an executive mandate is essential for success, creating a top-down push strategy without buy-in from end users often does more harm than good.

6. Actively involve end users in solution design.Active participation of end users n designing the CRM solution is a must. It is the end users who ultimately will have ownership of the solution and will determine its success or failure. Active participation by end users in the solution design will minimize the risk of non-use or inadequate use of the solution which is the fate suffered by many solutions.

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• 7. Let business goals drive functionality of the solution.Clearly define functionality requirements based on business need. It is important to remember that the solution is intended to provide business benefits and is not an exercise in technological prowess. A careful and effective balance has to be struck between technical efficiency and business requirements. This can be done through cost-benefit analyses.

8. Designate a consensus building project manager for implementation. One critical tactical element that is often overlooked during a CRM solution implementation is the need for an overall project manager who can effectively serve as a bridge among the various end-user groups and the implementation team. Territorial disputes and control issues among the various end-user groups and the implementation team can be the greatest

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impediment to progress of the project. An effective project manager must have credibility with the user groups and the implementation team, and be able to mediate and build consensus on areas of potential conflict.

9. Invest in training and communication plans to enable and empower end users.Many CRM initiatives are doomed from the beginning due to inattention to two relatively inexpensive yet critical elements of success: training and communication plans. It has been seen that while companies spend large sums on technology and process alignments, they are reluctant to allocate a small fraction of those sums to train end users on the solution and have a communication plan in place to keep everyone abreast of updates, modifications, success stories, glitches, etc.

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10. Use a phased approach to building CRM capabilities .While it is important for a company to have a grand vision of its CRM capabilities, it is critical to keep in mind that that vision probably has to be attained through a series of incremental steps. Reaching for too much almost always sets up the initiative for failure. A company needs to determine the sequence of incremental steps it can take given its business priorities, budget constraints, and organizational environment and get to the eventual goal by demonstrating value at each step.

11. Continuously measure and track results.Once the CRM capabilities are in place, it is essential to continuously measure the results and track them against benchmarks and targets set for the metrics. The project leader and team must put in place measuring and tracking mechanisms to enable course corrections and making of more precise decisions

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12. CRM is a never-ending journey--don't look for a final destination.CRM is not a discrete project; it is a business philosophy aimed at achieving customer centricity for the company. The mode of execution of this philosophy will change and evolve as customer needs, preferences, and values change. The implementation of CRM capabilities does not stop once the logic is understood and the concepts are rolled out to the company. CRM is a mindset that every employee must embrace and practice, every day

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• The CRM process is the most influential customer oriented strategy of the decade. Despite its humble origins it has evolved into a relatively complex strategy. The essentials of a CRM program include focus,

• The commitment to CRM goals and above all a desire to be customer focused. Here's how the CRM process actually works in an organization.

A look at the steps in the CRM process

• Establishing CRM goals

• Educating other departments

• Assembling customer information

• Designing the data model

• Vendor study

• Selecting the CRM solution

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• Establishing authority & responsibility

• Pilot projects

• Communication with customers through direct mail , electronic ```mail etc

• Customer surveys

• Customer satisfaction program

• Collection of customer information

• Provision of customer information to employees

• Usage of customer information in the business activities

• Feedback

• Analyze

• Documenting a new process

• Implementing final methodology

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CRM Implementation - the Right Way!

• What do firms need to do to get the most out of their CRM implementation? Here's a look

• at what can be done to get the utmost out of your CRM choice. Implementing these Steps can Ensure that Success follows:

• CRM should be implemented right across all business units. The CRM process should bring together employees, suppliers, customers, partners etc.

• It is important to cooperate in order to retain customers and increase customer loyalty. Employees, leaders, customers, etc. need to work together in addressing key issues.

• A customer information file is absolutely essential as it indicates various relationships. Organizations need to put down and keep it safely.

• There should be no barriers to the flow of information

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• Firms must implement new business processes that support the CRM choice.

• Firms need to put customers first. A common ground with customers should be identified. Organizations should identify anything that affects the customer negatively

• A company should build a cross-functional cooperation across your company. To do that it needs to increase the number of people involved in the CRM process.

• In the adopted strategy CRM solution should address change management

• Adequate CRM training should be provided within the organization.

• CRM solutions need to be aligned with the business strategy.

• Technology should be integrated with core business areas While automating business processes

• Give call centre staff customer profiles using existing data.

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• An organization should Start self-service and FAQ's

• Support outbound message management within the organization

• Proper decision should be taken about the choice of CRM solution only after appropriate information has been sought and analyzed.

• Secondly, a CRM implementation will essentially involve a healthy contribution from functional staff. This means that care should be taken to assign the roles of the project team and functional staff in a manner that is not inappropriate

• CRM implementation should involve process re-engineering

• CRM implementation must never follow a stringent application and configuration

• CRM development should be multi-tiered

• Provide scripting for call centre and telesales support service

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• It is critical to understand the complexity of your CRM program • It is important for an organization to ensure that CRM

development is executed around a structured development business process

• It is also important to ensure that a sound development roadmap is set forth in order to ensure things go as per schedule.

• The business-planning phase should clearly state the overall goals of the CRM implementation

• Scoping and prioritizing CRM projects should be done:• Here it is important to do the following:

--Understand the technologies involved in the CRM implementation – Learn the skills needed to implement CRM

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– Determine the number of staff members that will be working on it

– Determine whether consultants will be used and if so what the number will be

– Establish a time frame

• Implementing the above steps can go a long way in ensuring success. CRM implementation without adequate attention paid to the smallest details can have disastrous results.

• The CRM systems adopted should be used in such a manner that it gives its utmost to the organization.

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CRM Failures

• CRM failures have been costly, disruptive, and embarrassing. Red ink, shareholder losses, upset customers, lost market share, lawsuits, and career setbacks are all typical outcomes of CRM failures.

• The cost of CRM failure is dramatic and can take its toll in many areas of the business. The following summarizes the typical impacts by category:

• Financial PerformanceMarket share and operating losses Failure to achieve a return on investments Budget overruns High post-implementation running

costs • Customer Service Quality

Customer confusion, frustration, and dissatisfaction Lower service levels Slower time to market Negative brand perception

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• Sales EffectivenessLower sales force productivity Increased sales force cynicism toward new systems Increased sales force turnover

• Cultural ImpactsLow morale within IT and affected departments Growing cultural cynicism within the company toward adopting business change Company-wide loss of confidence in its ability to enact change Lost jobs in the executive suite Propensity for companies to become overly conservative with regard to investments in strategic initiatives. This leads to dampened innovation, a failure to strengthen advantages, and deferring the update of aging processes and infrastructure

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CHAPTER -II

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• CUSTOMER RELATIONSHIP MANAGEMENT From the outside, customers interacting with a company perceive the business as a single entity, despite interacting with a number of employees in different roles and departments.

• CRM is a combination of policies, processes, and strategies implemented by an organization to unify its customer interactions and provide a means to track customer information.

• It involves the use of technology in attracting new and profitable customers, while forming tighter bonds with existing ones.

•   Different Types of CRM Every Organizations Requirements are unique, and require customized solutions. Typically all those requirements can be categorized into Customer Service, Sales Management, General Management.     

• Some Functionality of CRM

• > Contact management

• > Sales Reporting.

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• > Lead management and sales management.

• > Customer data collection and analytics.

• > Customer purchase patterns and customizations.

• > Sales campaigns and their effectiveness.

• > Calculating ROI for campaigns and departments

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• Enterprise resource planning (ERP) is an integrated computer-based system used to manage internal and external resources including tangible assets, financial resources, materials, and human resources.

• It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.

• Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise wide system environment

• An ERP system can either reside on a centralized server or be distributed across modular hardware and software units that provide "services" and communicate on a LAN. The design allows a business to assemble modules from different vendors without the need for the placement of multiple copies of complex, expensive computer systems in areas which will not use their full capacity

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• ERP systems typically handle the Manufacturing, Logistics, distribution, Inventory ,Shipping, Invoicing and Accounting for a company.

• ERP software can aid in the control of many business activities, including sales, marketing, delivery, billing, production, inventory management Quality Management, and HRM

• ERP systems are cross-functional and enterprise-wide. All functional departments that are involved in operations or production are integrated in one system. In addition to areas such as manufacturing, warehousing, logistics, and information technology, this typically includes A/c, human resources, Marketing and Strategic Management

• To implement ERP systems, companies often seek the help of an ERP vendor or of third-party consulting companies. These firms typically provide three areas of professional services: consulting; customization; and support

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CRM / ERP Integration• The integration of CRM and ERP systems provides organizations

with an integrated approach to identifying, acquiring, and retaining customers by enabling organizations to manage and coordinate customer interactions across multiple channels, departments, lines of business, and geographies.

• CRM and ERP integration helps organizations maximize the value of every customer interaction, which leads to improved corporate performance.

• The notion of integrating all departments and functions of an organization on one platform and running off of one database has traditionally been unapproachable for most organizations.  In many organizations, each business application runs on its own system, which is optimized for the particular business unit or application.

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• Typically, when a customer places an order, the order begins a mostly paper-based journey from in-basket to in-basket around the company, often being keyed and re-keyed into different computer systems along the way. The vast amount of handling and re-keying causes delays and lost orders, and all the keying into different computer systems invites errors. Meanwhile, there is a lack of visibility to the enterprise.

• Integration of the CRM and ERP platforms provide multiple benefits and allows the organization to realize for highest ROI on their IT investments. With automated processes such as sales quotes, order submission, processing, and fullfilment. With the customer account status, order history, the company inventory levels and logistics data, you have full supply chain visibility.

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CRM and ERP Integration : Implementation Steps

Mapping Your Business• “As a first step in integrating CRM with ERP, forget about the

technology and map your business processes,” advised Steve Lippock, owner of Harvest gold, a Salesforce.com.inc partner. “Where integration is required, decide which database will be the master, and how often or how dynamically data needs to be updated. This will help you decide on an integration approach, and the technology decisions follow.” the procedure should be determined by the desired end result.Plan and Understand

• At this point, you have to determine what features and capabilities you want the integration to offer. “As with any implementation, planning is essential,” said Edward Siegel, director of marketing for Super office. CRM. “What needs to be displayed? How will the users access the information?

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• Will the ERP system feed the CRM system or vice versa ... or both? Are there security concerns? Is either the ERP or CRM system already in place or is this a totally new installation?”

Know What You're Working With

• Actually integrating the systems requires intimate knowledge of where the two connect. “Integration points come when opportunities convert to orders, and prospects convert to customers,”

• “Ongoing changes to customer data must be considered — you will need to decide which is the master database for customer contact information.

• “Other possible integration points include synchronization of product data, order history [to track actual sales volume against forecasted opportunity values] and the scoping/estimating/quoting process — especially where custom design services and custom configuration is required,”

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Link for Success• From the beginning to the end of the integration process, one

constant remains.

“It is always best to avoid storing redundant information”

• Thus we can say that The integration of customer relationship management (CRM) and enterprise resource planning (ERP) systems can be a long and technically demanding process. we can save time and money if we narrow the scope of our integration efforts and use specialized software products and coding techniques

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Common Available software Packages

• Compiere is a Open Source ERP software application with fully integrated CRM software solutions. Compiere is a fully integrated business solution for small-to-medium enterprises worldwide. Compiere is based on business process rather then departmental boundaries

• OpenBravo POS• OfBiz• Hipergate• Daffodil ( providing seamless integration between sales,

Marketing ,Customer service that handle Customer contact for an Enterprise)

• Open Source ERP & CRM Software · Yuza open Erp - Yuza open ERP it's a open source enterprise Erp Application, written in c# and running on MS Access database (also supported MS SQL Server MySql Oracle).

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The common features are *Campaign facility

 * Customizable Views

 * Applying Quick Filters

 * Automatic Mail Attachment

• friendly interface   

• * Data integrity and security

• * Company backed project

• * Supports B2B and B2C functions

* Availability of a built-in database

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Example 1: To calculate sales commissions:• A simple example of ERP system is to calculate sales

commissions. The human resource users calculate sales commission using an ERP system, by accessing a web service. This is done using getSalesCommision web service. This web service accesses two different back end systems to calculate the sales commissions. One is the ERP system that provides that invokes a function called getSalary and the other system is the CRM system that invokes getSalesData function call, wherein each function call is in the form of a web service.

• Thus, from above simple example we can see how an ERP system with its integrated web service applications. Help to calculate the sales commissions of various agents of a sales team in an organization.

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Integration of CRM With Data Warehouse• Integration of CRM with Data-Warehouse

(Creating a Customer Database).

Customer relationship management, is a process whose

objective is to enhance customer loyalty.

This process consists of the following: -

* Creation and management of data mines & warehouses;

* Development of appropriate organizational structures;

* Investment in technology; & People development.

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*Data Mining & Warehousing * People.

      Loyalty 

* Structure ,Alliances;*Call Centre. * Technology* Web; * Voice Mail; * Telephones.

 

Source :- Prof. Rajan Saxena – Marketing Management, Tata McGraw- Hill Publication, New Delhi.

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• CRM process depends on data. Single operation focused integrated logical database, data warehousing, data mining, decision support system (DSS), campaign management tools as well as call center software & hardware.

• A necessary step to a complete CRM solution is the construction of a customer database or information file.

• This is the foundation for any customer relationship management activity.

• For web based businesses, constructing a database should be a relatively straightforward task, as the customer transaction & contact information is accumulated as a natural part of the interaction with customers.

• For existing companies that have not previously collected much customer information, the task will involve seeking historical customer contact data from internal sources such as accounting & customer service.

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• What should be collected for the database? Ideally, the database

should contain information about the following: -• Transactions :-  This should include a complete purchase history

with accompanying details (price paid, delivery date, location etc.).

• Customer Contacts :- Today, there is an increasing number of customer contact points from multiple channels and contexts. This should not only include sales calls and service requests, but any customer-or-company-initiated contact.

• Descriptive Information:- This is for segmentation and other data analysis purposes.

* Response to Marketing Stimuli :- This part of the information file should contain whether or not the customer responded to a direct marketing initiative, a sales contact, or any other direct contact.

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• The data should be represented over time.Companies have traditionally used variety of methods to construct their databases.

• Durable goods manufactures utilize information from warranty cards for basic descriptive information.

• Unfortunately, response rates to warranty cards leave big gaps in the databases.

• Service businesses are normally in better shape since the nature of the product involves the kind of customer-company interaction that naturally leads to better data collection.

• For examples, banks have been in the forefront of CRM activities for a number of years. Telecom-related industries (long distance, wireless, cable services) similarly have a large amount of customer information.

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• Most CRM software focused on simplifying the organization and management of customer information.

• Such software, called 'Operational CRM', focuses on creating a customer database that presents a consistent picture of the customer's relationship with the company and providing that information in specific applications.

• This include sales force automation and customer service applications, in which the company "touches' the customer.

Operational CRM  Analytical CRM  Collaborative CRM

CUSTOMER

Interaction of CRM Technologies

             

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• Data mining is a process that uses a variety of data analysis and modeling techniques to discover patterns and relationships in data that are used to understand what customers want and predict what they will do.

• Data mining can help to select the right prospects on whom to focus, offer the right additional products to existing customers and identity of good customers who may be about to leave.

• These results in improved revenue because of a greatly improved ability to respond to each individual contact in the best way and reduced costs due to properly allocated resources.

• CRM applications that use data mining are called 'Analytical CRM'.

• Data mining also frequently used to identify a set of characteristics that segments customers into groups with similar behaviors, such as buying a particular product.

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• A special type of classification can recommend items based on similar  interests held by groups of customers. This is called 'Collaborative CRM

• Data mining can improve profitability in each stages of customer life cycle when integrated with operational, analytical or collaborative CRM systems or implement it as independent applications.

“ Data Mining is the process of extracting & presenting new knowledge, previously undetectable, selected from databases for actionable decisions.“

• It is the process of extracting valid, previously unknown & ultimately comprehensible information from a large database and using it to solve business problems and to make crucial business decisions.

• Data mining & knowledge discovery are receiving increasing attention in the business & technological press, among industry analysts, & among corporate management.

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Chapter-III

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E-CRM

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Customer Relationship Management (CRM)

CRM is a strategy by which companies optimise profitability through enhanced customer satisfaction.

CRM is about automating and enhancing the customer-centric business processes of Sales, Marketing, and Service.

CRM not only deals with automating these processes, but also focuses on ensuring that the front-office applications improve customer satisfaction, resulting in added customer loyalty that directly affects the organization’s bottom line.

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CRM Evolution

BPR ERP SFA CRM eCRM

Cost Reduction Strategy Growth Strategy

IT LedBusiness Led Marketing Led

1980s 1990s 2000s

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Need for e-CRM orthe problems faced by

Traditional CRM

Vendor offerings exist within the broad CRM categories of sales strong, service and marketing. CRM evolved with different vendors carving out their own niches in complete isolation from the others.

Lack of a single customer-centric data warehouse has caused any addition of more customer touch points only served to worsen the problem caused

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E-CRM

E-CRM (Electronic Customer Relationship Management) expands the traditional CRM techniques by integrating new electronic channels, such as Web, wireless, and voice technologies and combines it with e-business applications into the overall enterprise CRM strategy.

The goal is to drive consistency within all channels relative to sales, customer service and marketing initiatives to achieve a flawless customer experience and maximize customer satisfaction, customer loyalty and revenue.

Therefore ,it is just an expanded, integrated version of CRM . Thus, Old CRM + Internet = e-CRM

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The differences between CRM and e-CRM

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Key applications of e-CRMInformation integration application

An incomplete view of customers reduces their loyalty and trust

Consolidating customer data and information from different sources

To keep up with every customer’s interaction

Customer analysis application

Measures, predicts, and interprets customer behaviorsPredictive models to identify the customers most likely to

perform a particular activityOnline analytical processing, data mining and statistics

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Continued….

Real-time decision applicationTo coordinate and synchronize communications across

disparate customerAn effective real-time decision application promotes

information exchange between the company and every customer

Personalized messaging applicationBuilding customer profiles and enables customized product

and service offerings based on the information integration application

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Benefits :

Retaining existing customers.Selling more to existing customers.Finding and winning new customers.Interactions lead to trusted relationships:

Focus the business on improving customer relationships and earning a greater share of each customer’s business.

Increasing efficiency.Improving marketing and sales decision making.Enabling process measurement – leading to process improvement.

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Continued….

Enables 24/7 customers interaction: optimize interactive relationships between customers and companies.

Personalization through technology: enable a business to extend its personalized messaging through the Web and email.

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Goals of e-CRM

Reduce :Costs of marketing

Improve :Accuracy and relevancy of recommendationsCustomer satisfaction

Increase :Conversion rate, i.e., Turn browsers into buyersCustomer retention and frequencyOrder size

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customer response competitiveness through differentiationProfitability.

Continued….

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CRM in Retail• A look at most industries will show that each of them in turn are doing

their own little bit towards understanding the importance of

• customer focus. What is the retail industry doing on its part? What efforts are they making to interact with their customers?

• Several retailers have endeavored to add that extra personal touch and several more have not.

• The need for focusing a whole lot more on the customer has been acutely felt by them and they have tried to accommodate it.

• The past few years has witnessed a strong upsurge in the number of retailers looking for a lifetime strategy that will cater to their customer requirements. What have they come up with?

• Most of them have seen that the need of the moment is a customer strategy that caters to lifetime responsibilities.

• As a result they have turned to a customer strategy - CRM retail

software to fulfill those needs.

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Why opt for CRM?

• Market analysts dispute the correct figure but all are of the opinion that companies will pour billions of dollars into the CRM industry.

• This is because of its ability to maneuver customer relationships in the direction of profitability.

• The philosophy behind adopting retail CRM - the way the retail industry treats its customers influences future profitability. Net result?

• Companies are making bigger investments in CRM solutions. Retail CRM serves to support marketing, sales, and service processes involved in the business.

• CRM causes changes in the organization and the business work processes. CRM helps achieve a way of managing customer relationships in a better manner.

• Partner Relationship Management is yet another offshoot of CRM projects. It serves to support channel partners and all other channels as well between an enterprise and its end customers.

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E-CRM that basically serves to allow organizations to interact with their customers via the corporate Websites

CRM Retail Software Benefits:

• targeting prospects

• acquiring new customers

• campaign management

• lead distribution

• long-term relationship value

• effective selling processes

• forecasting

• transactions done at the lowest cost

• better service and

• handling post-sales service

• support issues with call center

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Useful Tips for the Retail Industry employing CRM :

• don't back off at the first problem

• defined the project plan

• involve the right people

• choose appropriate technology

• train new employees

• maintain system support

• give them an easy way to get answers

The Bottom Line?• Retailers need CRM!!! There is no disputing the fact that this is one

strategy the retail industry cannot afford to gloss over. The rewards are huge and need to be availed of if one wants to succeed in a competitive business world

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