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Customer Relationship Management [CRM]

Customer Relationship Management [CRM] 42
Customer relationship management MB104 By Mayank Kumar Pandey Assistant Professor at Noida Institute of Engineering and TechnologyUniversity Syllabus UNIT1 • Customer Relationship Management Introduction • CRM Fundamentals • Evolution of relationship marketing, Stages of relationship • Issues of relationship, Purpose of relationship marketing • CRM Marketing: Historical Perspectives • Emergence of CRM practice, CRM cycle, Stakeholders in CRM • Significance of CRM, Types of CRM • Success Factors in CRM • CRM Comprehension, CRM Implementation • Student Group Presentation1 Customer Relationship Management By: Mayank PandeyCustomer Relationship Management CRM • Customer relationship management (CRM) is a model for managing a company’s interactions with current and future customers. • It involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support. Customer Relationship Management By: Mayank PandeyCRM CUSTOMER RELATIONSHIP MANAGEMENT A customer is the Relationship has recipient of a goods, services, product, or To get the job been subject idea, obtained from matter of done through a seller, vendor, or supplier for a individual’s others. monetary or other personal feeling. valuable consideration. Customer Relationship Management By: Mayank PandeyRelationship: Theoretical Perspective I Social Penetration Theory – Stages of Social Penetration AFFECTIVE ORIENTATION EXPLORATORY AFFETIVE STAGE STAGE STAGE STABLE DEPENETRATION STAGE Customer Relationship Management By: Mayank PandeyRelationship: Theoretical Perspective Contd….. II Social Exchange Theory: Social Exchange Theory has cost, benefit, outcome, comparison level, satisfaction and dependence as important components. Few Calculations in Relationship: 1. Outcome = Benefits – Cost 2. Satisfaction= Outcome – Comparison Level 3. Dependence= Outcome – Comparison Level Option Customer Relationship Management By: Mayank PandeyRelationship: Theoretical Perspective Contd….. III Equity Theory: This theory states that individual who perceive themselves as either underrewarded or over rewarded will experience distress and this distress leads to restore equity within the relationship. It focuses on determining whether the distribution of resources is fair for both relational partner. Customer Relationship Management By: Mayank PandeyRelationship: Theoretical Perspective Contd….. • This theory postulate that one is attracted to other on the basis of four major factors: 1. Attractiveness 2. Proximity 3. Reinforcement 4. Similarity Customer Relationship Management By: Mayank PandeyTypes of Relationship • Depends on Situation Customer Relationship Management By: Mayank PandeyStages of Relationship Contact Walking away from relationship Increased frequency of Contact Involvement Depth of Relationship Intimacy Dissolution Deterioration Repair Customer Relationship Management By: Mayank PandeyRelationship marketing • Relationship marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions. • As a practice, relationship marketing differs from other forms of marketing in that it recognizes the long term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages Customer Relationship Management By: Mayank PandeyContd…. • Relationship marketing refers to a shortterm arrangement where both the buyer and seller have an interest in providing a more satisfying exchange. • This approach tries to disambiguiously transcend the simple post purchase exchange process with a customer to make more truthful and richer contact by providing a more holistic, personalized purchase, and uses the experience to create stronger ties. Customer Relationship Management By: Mayank PandeyMass Markets • Historically largescale mass production and distribution methods adopted. • Costefficiencies drove prices lower. • However, products became standardized. • Customers had to find the best option that fulfilled their needs. • Customers grouped into mass markets and were communicated through mass media TV, Print etc. • Suited well for a supplier’s economy Customer Relationship Management By: Mayank PandeyToday’s Markets • Foreign suppliers and competition from non traditional suppliers has increased competition. • This increases supply, and so the need for better service. • Technology has made the reach of companies global. • Technology has enabled large scale customized production : called mass customization. Customer Relationship Management By: Mayank PandeyToday’s Markets • Stagnation of growth in customer base. • Too much competition for customer’s free time. • Customers are increasingly convenience shopping as opposed to price driven shopping. • Consumers now prefer suppliers that provide good quality at a fair price. • They find such a supplier and stay with them for a long time. Customer Relationship Management By: Mayank PandeyCustomer Retention+ Share of Customer • Basic premise: • Retain customers over a long term and satisfy the largest portion of their needs with your products and services. • The“leakybucket” concept is out. • Today’s consumers want companies to • Understand their needs and wants • Adapt their products and services to these needs and wants • The company takes partial responsibility for the Customer Relationship Management By: Mayank Pandey customer’s choice of product.Developing Relationship Marketing Capabilities • Initial steps include: • Data collection • Data access and marketing tools • Product and service customization • Customer service procedures • Customer access channels • Key measures: • Customer satisfaction • Share of Wallet • Stability of relationship Customer Relationship Management By: Mayank PandeyDeveloping Relationship Marketing Capabilities • If implemented properly customers are locked in due to satisfaction, ease of service, and value. • This increases the cost on the customer’s part when they have to switch suppliers. • Customer service should be interactive, personalized. • Communication is through multiple channels. Customer Relationship Management By: Mayank PandeyDeveloping Relationship Marketing Capabilities • Use customer service opportunities to – Verify if needs and preferences have been addressed – Measure levels of satisfaction – Find any other questions that need to be answered – Additional customer information such as change in status – Verify if presenting new products or options is appropriate Customer Relationship Management By: Mayank PandeyCustomer Information • Requires more information than traditional direct marketing. • Optimal types of customer information will vary by industry, company market positioning, and marketing programs. • Building a customer information base is an iterative long term process. Customer Relationship Management By: Mayank PandeyExample: Cellular Phones • Stage 1: – Preliminary information collected during the first purchase to make recommendations • Stage 2: – Based on the calling patterns and bills make refined recommendations and offer better deals that the customer cannot refuse. Customer Relationship Management By: Mayank PandeyCustomization and Added Value • Provide tangible benefits to customers through customization. • Example: Dell Computers • Trend evident in service industries such as • Insurance • Computer systems • Telephone • Financial Services • Customer service is a better differentiating weapon than price or features. Customer Relationship Management By: Mayank PandeyCustomization and Added Value • Competitive advantage gained through – Implementing a corporate culture focusing on the customer. – Developing a products and services that can be customized. – Training and empowering the customer service staff. – Developing infrastructure to collect and maintain customer information Customer Relationship Management By: Mayank PandeyMarketing Objectives • Customer Awareness and Education • Customer Acquisition • Customer Acceleration • Customer Retention • Niche Marketing • Lapsed Customer Reactivation Customer Relationship Management By: Mayank PandeyBuilding Customer Loyalty • Key measurement for loyalty: Retention • 5 increase in retention rate can increase lifetime value by 75 (F. Reichheld) • The top 20 customers yield 80 of revenue • So, treat the ‘Gold’ better than others Customer Relationship Management By: Mayank PandeyBuilding Customer Loyalty • Relationship effects of retaining non profitable customers Reference accounts Referral Learning Innovation Customer Relationship Management By: Mayank PandeyBuilding Customer Loyalty • Five customer loyalty promotions Develop catalog with premiums available with proof of purchase Establish an ‘insiders’ or ‘special privilege’ club Create a prestige society offering both practical benefits and selfimage symbols Establish an apparently personal relationship Provide extra conveniences that have secondary purpose of increasing consumption Customer Relationship Management By: Mayank PandeyWhat is CRM: Evolution and Scope • What is CRM – Is it • A strategy • A process • A software • A philosophy • A programmer • A call centre support Customer Relationship Management By: Mayank PandeyLet us examine…. • Gartner: – CRM as business strategy designed to optimize profitability, revenue and customer satisfaction. Customer Relationship Management By: Mayank PandeyResult…. • On the basis of discussions CRM implies following: – CRM is a process. – It needs continuous revision and updation. – Customer value identification is must. – It strives for customer delight. – CRM process aims at profitable relation with the customers. – It also aims to convert them to act as company’s brand ambassador. – Employee involvement and empowerment is must for its successful implementation. – Adequate technological support is also essential for successful CRM. Customer Relationship Management By: Mayank PandeyDesigning CRM Strategy • A successful CRM strategy will address four key areas of the business: – Strategy – People – Technology – Processes Customer Relationship Management By: Mayank PandeyD 4 concept Step 1: Define the existing CRM process within the company Step 2: Determine the perception that how the company will manage their customer relationship both internally and externally Step 3: Design the ideal CRM solution relative to the company or industry Step 4: Deliver a strategy for implementation Customer Relationship Management By: Mayank PandeyWhat motivates companies to adapt CRM Strategy • Competition • Consumer Expectations • Technology • Diminishing impact of advertising Customer Relationship Management By: Mayank PandeyCRM Cycle • The CRM cycle is as follows: – Obtaining information from customer. – Creating Superior Customer value. – Building Loyal Customers. – Acquisition of new customers. – Working towards increased profitability. Customer Relationship Management By: Mayank PandeyCRM Cycle Diagrammatic Presentation Information from Customers. Creating New Increased Superior Profitabilit Customer Customer y Acquisition Value Building Loyal Customers Customer Relationship Management By: Mayank PandeyStakehlders in CRM • There are four major stakeholders who play important role in the entire process of CRM: – Customer – Employees – Suppliers – Partners Customer Relationship Management By: Mayank PandeySignificance of CRM • Perpetual stream of Revenue. • Positive referral creation. • Provides Premium. • Helps customer retention. • Lower cost of sale. • Helps understanding consumer behaviour. • Provides opportunity to crosssell and upsell. • Reduces marketing time. • Channel Cost rationalization. • Enable Business Process Reengineering. Customer Relationship Management By: Mayank PandeyTypes of CRM • Types of CRM are: – Analytical CRM – Collaborative CRM – Operational CRM – Geographic CRM – Sales Intelligence CRM Customer Relationship Management By: Mayank PandeyAnalytical CRM • Analytical CRM comprises the analysis and systematic evaluation of customer data using business intelligence functions. • The aim is to filter out the key facts from gathered information and gain customer knowledge. • Analytical CRM allows customer satisfaction to be measured, for example, or trends among customers to move to other suppliers to be detected. • Knowledge of customers' behaviour can also be used specifically for communication and addressing customers in operational CRM, such as in campaign management. Example: Customers' buying behaviour is analyzed in analytical CRM. This analysis reveals which customers have not bought anything for a considerable length of time. A mail shot campaign, guided by operational CRM, will address this target group directly and encourage it to purchase various products. Customer Relationship Management By: Mayank PandeyCollaborative CRM • Collaborative Customer Relationship Management (Collaborative CRM or CCRM) is a CRM approach in which the customer interaction data of an organization is integrated and synchronously shared to enhance customer satisfaction and loyalty for maximized profitability and revenue. • Collaborative CRM integrates customers, processes, strategies and insight, allowing organizations to more effectively and efficiently serve and retain customers. Customer Relationship Management By: Mayank PandeyOperational CRM • Operational CRM is mainly focused on automation, improvement and enhancement of business processes which are based on customerfacing or customer supporting. • The main importance of a CRM system lies on how the selling, marketing and service oriented processes are automated, and for which operational CRM systems are embedded with following major automation applications: – Marketing Automation – Sales Force Automation – Service Automation Customer Relationship Management By: Mayank PandeyGeographic CRM • Geographic CRM (GCRM) combines geographic information system and traditional CRM. Geographic data can be analyzed to provide a snapshot of potential customers in a region or to plan routes for customer visits. Customer Relationship Management By: Mayank PandeySales Intelligence CRM • Sales Intelligence CRM is similar to Analytical CRM, but is intended as a more direct sales tool. Features include alerts sent to sales staff regarding: – Crossselling/Upselling/Switchselling opportunities – Customer drift – Sales performance – Customer trends – Customer margins Customer Relationship Management By: Mayank PandeyCRM Success Factor • Following are the main CRM success factor: – Top management support. – Vision – Willingness to change the process. – Willingness to share the data. – Integration of back office process. – Cultural/Customer Change. – KM Capabilities. Customer Relationship Management By: Mayank PandeyCRM Comprehension A typical customer service process. IDENTIFYING LEVERAGE CUSTOMER’S TRAIN EMPLOYEE TECHNOLOGY COMFORT LEVEL EMPHASIS ON SERVICE SUSTAINED CRM SUCCESS INNOVATION PRACTICE Customer Relationship Management By: Mayank PandeyNeed of CRM Comprehension INPUT •Repeat Purchase Perceived Customer •Customer Retention •Positive Referrals Performance Satisfaction •CrossSelling and Up (PP) Selling OFFERS When PPCE C U TANGIBLES S Company’s Customer’ T Service Delivery Marketing s cognitive O Programme ability M Employee Behaviour E When PPCE R Grievance Handling •Negative Publicity Customer Customer •Loss in Sale Dis Expectation •Customer Dissonance satisfaction (CE) Customer evaluation process INPUTComponents of CRM Programme Company’s Marketing Programme Customer Expectation Perceived Performance Competitor’s Offers Customer’s Resultant Behaviour Customer Relationship Management By: Mayank PandeyCRM Value Chain Customer Data Customer Information Customer Knowledge Customer Service Customer Satisfaction Customer Relationship Management By: Mayank PandeyCRM Implementation • CRM Implementation.docx • Customer Segmentation Based on Customer Life time value 1 • Customer Profiling 2 • Offer Customization 3 • Matching Service Cost and Revenue 4 • Employee Participation in CRM Design 5 • Motivating Employees for Effective Implementation 6 • Making CRM an Enterprize wide Activity 7 • Adequate technology Support for CRM Implementation 8 • Consistency testing of CRM Programs 9 • CRM Practice Evaluation Form 10Difference between Transactional Marketing and Relationship Marketing Transactional Marketing Relationship Marketing • One off exchange • Ongoing Exchange • Brand Management • Customer Management • Short Term Focus • Long Term Focus • Mass Communication • Personal Communication • Isolated Market Research • Ongoing Dialog • Market Share • Mind Share • Profitability of Transaction • Lifetime Value of • Brand Equity Customer • Customer Equity Customer Relationship Management By: Mayank PandeyCustomer Relationship Management By: Mayank Pandey
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