CRM The Stra ategic Imperatives

Session Coverag ge

Explosion of CRM in Marke eting and IT Enablers for the Growth of CRM Criticality of Customer Rela ationships Why Businesses Should A Adopt CRM? Implementing p g CRM
2

Explosion p of CRM in Marketing g & IT

Academics as well as practi itioners Conferences Journals Special Issues Associations & Forums Centers for CRM IT Solutions Siebel, E.piph hany, Oracle, SAP, Sage CRM, Microsoft Dynamics, SugarC CRM, Salesforce

Relationship p Management g

Relationships

Enterprise

Customer (Internal)

Cust tomer (Interm mediary)

Customer (Shareholder)

Enablers for the Growth of CRM

Emergence of service economy e economy, Emergence of market ec conomy, Global orientation of bus sinesses, and Aging population of the economically advanced economies

Acquiring, Retaining and Growing Customers What CRM Is About!

Customer
Customers needs can be situatio onal in nature. Customers needs are dynamic an nd can change over time, as well. Customers needs often correlate e with customer value. The most fundamental human ne eeds are psychological. There is no single best way to diff ferentiate customers by their needs. needs

Acquiring, Retaining and Growing G Customers.

Understand what they want Give what they want Give them at the right time and right place Deliver what is promised

Acquiring

Retaining Customers.

Keep the customer happy Building re elationships Constant communication c Remember r the little things o Business With Easy To Do

Acquiring

Ret taining

Acquiring

Growing Customers.

Keep value propositions g genuine Establishing meaningful & profitable relationships p trust level Build up Treat Customer Fairly

Acquiring

Growing

Enablers for the Growth of CRM ---1

Emergence E of f service i ec conomy

60-80% of GDP of develo oped nations >50% 50% in i I India di greater customer orie entation in services due to simultaneity / inseparab bility Services early adopters of f CRM
hotels, , airlines, , banking, g, financial fi services, , telecom and retailing. g

10

Enablers for the Growth of CRM----2

Emergence E of f market k t economy

Deregulation of indust tries across the world in the 90s
banking, telecommunica ations, broadcasting and airlines

Market oriented economy y necessitated customer focus and boosted the importance of CRM.

11

Enablers for the Growth of CRM ---3

Global Gl b l orientation i t ti of f bus b sinesses i

National markets to a borderless world / regional world Emergence of trading blocks b WTO helped create a global g orientation for firms Firms need stronger customer orientation to tap opportunities pp in new ma arkets while defending g their home markets.

12

Enablers for the Growth of CRM ----4

Aging A i population l ti of f th the economically i ll advanced d d economies i

Opportunities for wellness, financial well being, safety, security & recreation Slowed markets for traditiona al goods & services designed for a younger population Grow by increasing share share of wallet wallet & not through growth growth of markets stomers to meet changing needs Understanding of existing cus through h h suitable bl products d and d services.

13

Criticality y of Cus stomer Relationships p

Non-traditional N t diti l competit tit tion, ti Market maturity, and Misalignment between revenue and profits.

14

Criticality y of Cus stomer Relationships p

Non-traditional N t diti l competition titi

New entrants from outside th he industry Reliance in telecom, , Kingf gfisher in Airlines Substitute technology Digital Cameras, VoIP Supplier as a competitor Customer as a competitor labels Store labels s Private labels,

Incumbents forced to be relationship oriented to retain customers & protect from no on-traditional on traditional competitors.
15

Criticality y of Cus stomer Relationships p

Market M k t maturity t it
From capacity creation to o capacity utilization in developed markets Growth in emerging markets like l India and China. Understanding customers criti ical to success in these markets
diff differences in i customer t ne eeds, d cultural, lt l social, i l economic i and d also l regulatory environments.

Market maturity forcing firms s to be more customer-oriented

to retain their customers in th heir home markets and to attract customers in emerg ging markets.

16

Criticality y of Cus stomer Relationships p

Market M k t maturity t it
Firms from develope ed countries rely on repeat customers in domestic markets

17

Criticality y of Cus stomer Relationships p

Misalignment Mi li t between b t revenue and d profits fit

Inefficiencies through cus stomer subsidization Distribution Di t ib ti of f revenue es is i exponential, ti l while hil costs t distributed linearly with customer c size Revenues sharply skew wed from largest to smallest customers, while costs de ecline more gradually A small number of highly g yp profitable customers subsidise a large number of non-prof fitable customers

18

Customer Revenu ues & Costs

UNIT/$

COST

REVENUES
BIGGEST

CUSTOM MERS

SMALLEST
19

Criticality y of Cus stomer Relationships p

Misalignment Mi li t between b t reven nue and d profits fit

In retail markets, profit ma argins higher in large accounts and heavy users AT&T in August 1998
Was losing money on app proximately 25 million of its 70 million residential customers. customers 25 million customers - No long distance call or value added services. US $6 per month on custome er support. US $72 a year on each h of f the these 25 mn customers. t

20

Customer Revenu ues & Costs

NONTRADITIONAL COMPETITION CUSTO OMER RELATIO ONSHIP MANAGEMENT CUSTOMER NSACTION TRAN MAN NAGEMENT

UNIT/$

CUSTOMER OUTSOURCING MANAGEMENT

COST

REVENUES
BIGGEST

CUSTOM MERS

SMALLEST
21

Why y Businesses s Should Adopt p CRM?

Demand D d side id
rising customer expectations

Supply side
Technological advances & Declining costs of ICT reduce barriers to adoption of technology led CRM initi iatives.

22

Why y Businesses s Should Adopt p CRM? 1

Rising Ri i customer t expecta tations ti

increasing affluence in th he emerging economies, Greater G t awareness d due t to media di explosion, l i and d Increasing customer diver rsity.

23

Why y Businesses s Should Adopt p CRM?

Increasing affluence in the emerging e economies economies,

Large Middle Class in India and a China Demanding and quality consc cious. Markets - from a sellers to a buyers b market Professional class with greater global awareness and influence.
Can afford and are willing g to p pay y for better and customized p products and services. Nuclear families & double in ncome Traditional homemaking g acti ivities like cooking, g cleaning g and childcare being outsourced to service providers. p Boosts service economy Services force a higher custo omer orientation.

24

Why y Businesses s Should Adopt p CRM?

Greater G t awareness due d to to media di explosion l i

Explosion in the tradition nal media like the newspapers and televisions as well new media m like cable television and the internet
TV homes has remained stable s at about 100 million in the US in the last decade eloping countries It has exploded in the deve
China (341 mn), mn) India (~100 mn) and Brazil (44 mn)

Has raised customer aspira ations as well as expectations

25

Why y Businesses Should S Adopt p CRM?

Increasing I i customer t dive di ersity it

Mass marketing practices s fail with customers who are diverse in their lifestyles lifestyles, age, age income and ethnicity US
ethnic pluralism is increa asing as some minority groups like the Hispanic, Afro-American and the Asian are growing rapidly

Diversity y increases the e diversity y in demand and expectations.

26

Why y Businesses Should S Adopt p CRM?

Technological T h l i l advances d

27

Why y Businesses Should S Adopt p CRM?

Technological T h l i l advances d
Production
CAD/CAM CAD/CAM, JIT, JIT FMS Dell, Toyota

Distribution
Computer Aided Logistics (CALS) & scanner technology allow faster response - replenish hment with fewer stock-outs.

28

Why y Businesses Should S Adopt p CRM?

Technological advances
Facilitation
E-commerce E commerce technologies s connect enterprise with suppliers & customers Facilitates commercial as well w informational exchange Direct Services at a lower cost & Dis-intermediation

Consumption
Personalized consumptio on by co-opting customers as coproducers e.g. Dell Desire for instant gratif fication drives businesses to provide access to products anytime e and anywhere e.g. banks

29

Implementing p g CR RM

Developments in IT IT, data wa arehousing and data mining makes it possible for firms to t maintain 1-to-1relationships with their key customers. Challenges in selecting and implementing i technology intensive CRM solutions
top management commitment t, change management, developing customer centric processes, p integrating with legacy system ms, identifying and establishing pe erformance metrices, and evaluation of return on invest tments
30

Implementing p g CR RM

M Market-related k t l t d capabili bili iti ities t maintain to i t i customer t relationships for competi itive advantage
R Relationship l ti hi orientation i t ti must m t pervade d the th mindset, i d t values, l and norms of the organiza ation. Deepening knowledge of f customers and putting it to work throughout the organizati ion. Key yp processes must be in nternally y integrated g and externally y aligned with the corresp ponding processes of the firms customers.
31

Success of CRM in nitiatives

Process oriented strategic approach

3 elements e e e ts of o market-related a et e ated capability to maintain relationships with most valuable customers for competitive advantage. Relationship Orientation Keep deepening knowledge of customers and use it Key processes must be internally integrated and externally aligned with corresponding processes of firms customers.

Link the Operational, informational & organisational components of CRM. CRM

Delineate the challenges p formation, of Customer Relationship governance, performance evaluation and evolution.
32