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 is CRM. A narrow perspective of customer relationship
management is creating a team relationship among sales, marketing, and
customer support activities within an organization.
Another narrow, yet relevant, viewpoint is to consider CRM only as customer
retention in which a variety of after marketing 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 individual 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.
The conclusions of the study were:

 A Totally Satisfied Customer contributes 2.6 times more revenue to a

company as a Somewhat Satisfied Customer.
A Totally Satisfied Customer contributes 17 times as much revenue as a
Somewhat Dissatisfied 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 and overall 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
organization, he is a part of the organization.

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 quite different 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

High

Service Requirement

Low value customers who

Low value customers who
Require high levels of service
Require high levels of service
Must either purchase the higher level
Must either purchase the higher level
of service or become our competitors
of service or become our competitors
low value/high cost customers
low value/high cost customers

High value customers who

High value customers who
require a high level of service are
require a high level of service are
maintained without expanding the
maintained without expanding the
costly offering to the entire
costly offering to the entire
customer population
customer population

Low
Low

Customer Value 3

Fig. 1 Customer value Service Matrix

High

 Keeping Existing Customers

Grading customers from very satisfied to very disappoint should help the
organization in improving its customer satisfaction levels and scores. As the
satisfaction level for each customer improve so shall the customer retention with
the organization.

Maximizing Life time value

Exploit 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 mind share 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)

High

Strategic Importance To Your Business Plan

*You have No Choice But To

*Cultivate Relationship.

Handle Them Very Carefully.

Will Consume Energy

Spend Energy.
Go Out Of Your Way.

# Think Of Innovative Ways of

Getting them On Your Side, But
The Cost Of Acquisition Must
Be Controlled

#Think Of Strategies TO Move

Them Away From Competition.
Will Consume Disproportionately
High Energy.

*Existing
Customers
#Potential
Customers

*Focus On Short Term Profitability.

Spend Minimum Energy To Meet Your
Objectives.

Low

#Dont Pursue.
Use Opportunity As It Comes.
Short Term Acquisition Shouldnt Affect
Long Term Image.

*Very cautious decision needed. Reexamine 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

Relationship & Profitability

Potential
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
Learning from
customers &
prospects

Creating
Profits
Acquiring new
customers

Fig.3

CRM Activities

3
4

Creating loyal
customers
Customer Relationship
Life Cycle

Creating value
for customers &
prospects
2

CRM facilitates closed- loop customer interactions through all phases of the
customer relation life cycle including:

1. Customer Engagement

Marketing

2. Business Transaction

Planning

and

Campaign Management

Telemarketing

and

Opportunity Management

Sales Activity and Contact

Segmentation,

Product, and Service Profiling

Collaborative

Internet

Pricing

and

Configuration

Management
Customer

Order Acquisition

Lead

Generation

E-Selling

Telesales

Field Sales

Profitability Analysis

One Step Buying and Selling

Content

Management
3. Order Fulfillment

4. Customer Service

Complete Order Life Cycle

Process

Real-Time Availability Checks

Contract,

Billing,

Interaction Center

Internet

Customer

Self-

Service

and

Financials Management

Fulfillment Visibility and Order

Tracking

Service Management

Claims Management

Field

Service

--

Mobile

Service

Field Service -- Dispatch

Integration
Services

Customer Engagement

of

Marketplace

Marketing Planning and Campaign Management -- Enables complete

marketing campaigns, including content development, audience definition,
market segmentation, and communications

Telemarketing

and

Lead

Generation

--

Facilitates

customer

segmentation, lead qualification, call list management, and monitoring of

campaign progress by using integrated analytical CRM functionality

Opportunity Management -- Provides sales tracking and sales

forecasting; helps plan sales approaches, identify key decision makers,
and estimate potential-to-buy and potential closing dates

Sales Activity and Contact Management -- Organizes daily workloads

and customer contact information for display in calendar application;
provides links to Business Intelligence reporting capabilities

Business Transaction
In the business transaction phase of the relationship life cycle Customer
Relationship Management supports the following key functional areas:

Order Acquisition -- Enables planning, organizing, and implementation of

sales strategy; monitors sales pipeline, sales portfolio, and sales budget;
facilitates coordination of budgets, forecasts, and reports on product and
pricing trends

Internet Pricing and Configuration -- Delivers online systems that allow

users to configure products online and compare prices across different
catalogs and marketplaces; includes shopping basket functions

E-Selling -- Provides solution for selling products and services via the
Internet; covers all phases of sales cycle, including one-to-one marketing,
catalog browsing, search, order placement, payment, contract completion,
and customer support

Telesales -- Manages inbound and outbound calls; handles high call

volumes; provides efficient user interface; integrates sales information
from back-office systems and product information from online catalogs
7

Field Sales -- Delivers key customer and prospect information to sales

personnel at any place, at any time; facilitates planning and maintenance
of sales activities, such as appointments, visits, and calls, and provides
activity reports; creates quotations and takes orders; includes support for
mobile and wireless devices

Order Fulfillment
In the order fulfillment phase of the relationship life cycle Customer Relationship
Management supports the following key functional areas:

Complete Order Life Cycle Process -- Provides the ability to track and
trace orders at all points along order management, manufacturing,
distribution, and service processes; proactively notifies customers of
changes that affect delivery

Real-time Availability Checks -- Enables allocation of resources in realtime at the front-end; includes real-time access to inventory levels,
production capacity, and lead-time requirements across the entire supply
chain; enables visibility into product and service delivery dates

Contract, Billing, and Financials Management -- Provides information

about customer contracts, billing status, and accounts; integrates backoffice functions

Fulfillment Visibility and Order Tracking -- Enables real-time tracking of

order fulfillment; provides unique, customized and "guided" content for
customers; allows sharing of information with customers via the Internet

Customer Service
In the customer service phase of the relationship life cycle Customer Relationship
Management supports the following key functional areas:

Interaction Center -- Provides inbound and outbound call processing, email management, and activity management to track, monitor, and
enhance all customer contact; supports multiple channels for customer
communication, including telephony and Web; integrates industry-leading
eFrontOffice call center applications from Nortel Networks Clarify; provides
8

certified interfaces to leading computer telephony integration (CTI)

solutions

Internet Customer Self-Service -- Offers customers and prospects

access to information and customer service functions via Internet;
supports effective customer self service; includes case-logic system
featuring advanced decision support for problem determination and
resolution

Service Management -- Meets varied demands of service management

business; handles customer installations; facilitates simple and complex
services; supports services carried out at customer site or in-house repair
center (depot); supports involvement of external service providers;
integrates contract management; checks customer warranties when
services

are

performed;

calculates

services

charges;

integrates

information from materials management, cost accounting, billing, and

accounts receivable; monitors day-to-day operations; helps decision
makers with strategic management issues

Claims Management -- Facilitates handling of entire claims process

Field Service - (Mobile Service) -- Delivers and tracks customer and

account information for field service personnel; provides service planning
and forecasting, scheduling, and dispatching functionality through tight
integration with fulfillment systems; includes support for mobile and
wireless devices

Field Service - (Dispatch) -- Enables rapid allocation of service engineers

and materials to meet incoming service requests

Integration of Marketplace Services -- Provides access to a broad range

of applications and services hosted on virtual marketplaces
Figure 4 Customer Life Cycle Management
Business Transaction

Customer Retention
and referrals for new
customers

Customer
Engagement

Order Fulfillment

Customer Service

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:

Satisfying Needs, Customer Orientation

The organization 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

10

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: 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, and 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.

11

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.
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.
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.

Team Structure

Purpose

Increase
Effectiveness
Planning
Process
Improve Efficiency

Role Specification

Planning Process
Process Alignment

Programs

Account Management
Retention Marketing
Co-op Agreements

Monitoring Process
Communication

Partners

Criteria
Process

Employee Motivation
Employee Training

12

Relationship Performance
Strategic
Financial
Marketing
Retention
Satisfaction
Loyalty

Evolution
Enhancement
Improvement

Fig 5. CRM Process Framework

13

Business Objectives From CRM

The following are some of the strategic objectives offered by the Sales
Applications in the CRM suite:

Increased Revenue

Focus your sales force on increasing your companys revenues through better
Information and better incentives to drive top line growth.
Through a CRM integrated solution, sales reps can access and share account
and contact management information throughout the enterprise, facilitating team
selling that will lead to closing more deals, faster. It also allows sales reps to
effectively target their selling efforts to focus on high-value deals and meet
revenue targets.

Improve Global Forecast and Pipeline Management

Improve information access, forecasting and pipeline management to improve

your organization's ability to close deals.
Field Sales Online provides up-to-the minute pipeline and forecasting information
to an account manager, sales manager, or territory manager. For an account,
sales rep, or sales group, a pipeline analysis is available real time by sales
channel, sales status, and sales stage. Field Sales Online's multi-currency
consolidation of divisional forecasts provides sales executives with a higher,
global visibility of their company revenue forecast.
Sales reps can review and monitor the health of their sales pipeline through
graphical views. Sales reps can easily manage and view any combination of won,
forecasted, upside or lost pipeline opportunities by depicting their sales
information through this fully interactive interface. Sales reps can also define a
forecasting window on a "rolling" schedule for any number of pre-defined periods.
This gives your sales organization the flexibility to project forecasts for multiple
periods, freeze forecasting periods, and retain historical information for trend and
win/loss analysis. Sales reps can also generate sales forecasts in units as well as

14

currency. Unit forecasts integrated with Materials Resource Planning, allowing

MRP planners to include the sales pipeline in their manufacturing forecasts.

Improve Win Probability

Improve the focus of your sales efforts with better information to close deals.
Global -line view of their entire sales pipeline-across business units and products.
With this view, sales organizations can better qualify leads and assign
organizations have a top their top sales reps to the top accounts that have the
highest win probability. Sales reps also have access to competitive information
collected from deals lost through pipeline management features, thus increasing
the chances for a successful sale. Through mobile functionality, sales reps have
the ability to download complete territory information to their laptops for better
account management while on the road. Account, contact, activity, and
opportunity information can be accessed and updated throughout the sales cycle,
completely disconnected from the corporate network. Next time the sales rep
connects to the network, the information is uploaded and is available throughout
the organization.

Reduce Cost of Sales

New technologies can lower the cost of deploying sales automation solutions and
at the same time improve the effectiveness of your sales efforts.
Field Sales Online reduces implementation time as well as promotes sustained
use of the application by the sales force, reducing the cost of deploying sales
automation solutions within your organization. Field Sales Online's Web
architecture enables global deployment and upgrade to remote users as well as
easy customization. Dynamic menus and tabs facilitate navigation and eliminate
the need for user training. Users can access summary information for their
customers, opportunities, and compensation by a single click of the mouse,
export the information to their preferred spreadsheet or drill-down to the lowest
level of detail. This reduces costs and extends the mobility of sales one step
further with the introduction of application support for mobile hand-held devices.

15

Increase Sales Rep Productivity.

Reduce the steps involved in tracking and quoting customer data with integration
of sales capabilities across your enterprise.
Field Sales Online provides sales managers with an efficient tool to monitor sales
force performance. Opportunities and pipeline are tracked at each stage of the
sales funnel by channel, sales group, sales rep, or partner sales rep. In addition,
sales managers and executives can identify their top and bottom performers.
Managers can then analyze background, training, and tools used by their top
performers to replicate successful profiles within the sales organization to
maximize its efficiency and performance.

Promote Sales Representation Retention

Empower your sales force to proactively track and monitor their performance and
compensation levels to better incentive them to achieve goals and be successful
within their positions and for your company.
Sales applications enable sales reps to view their compensation summary, the
breakdown of their commission by deal, product line, and period, adjustments
and transactions. In addition, sales reps can "blind-rank" themselves at anytime
to measure their performance against a group of peers. Sales reps can forecast
their future compensation and commissions based on their current pipeline and
focus their selling time on the most valuable opportunities.
Effective tracking and reporting options provide verification to the sales force that
they are receiving appropriate compensation, so they can track their own
performance.
Sales Compensation offers flexible reporting access, letting you define the
information users can access. For example, you can allow users to create reports
for only their commission and performance data, or sales managers to create
reports related to the sales people who are assigned to them within the
salesperson hierarchy.
16

The objectives for Marketing Applications offered by a CRM suite are as follows

Closed- loop Marketing

Improve marketing management and programs with a comprehensive marketing

system that supports planning, campaign management, execution, Internet
support and analysis.
Marketing Applications automates the entire marketing process from demand
creation

to

revenue

recognition.

Designed

specifically

for

marketing

professionals, the application automatically collects campaign results and tracks

campaign effectiveness across different sales channels, by market segments,
and even individual customer results. This level of detail enables marketers to
reduce costs while increasing the effectiveness of their marketing efforts.

Better Information for Better Management

Implement highly focused, targeted campaigns with better returns on your

marketing investments.
Marketing applications are tightly integrated with the other applications of the
CRM suite as well as the ERP applications. This integration enables marketers to
tap into the wealth of data collected through every customer "touch" with their
company whether through field sales, a call center, or the Web. Without a
dependence on simple demographics, marketers will be able to profile customers
based on any number of criteria including sales cycle, payment preference, and
purchase frequency, to tailor messages and campaigns with better accuracy for
highly focused, individualized marketing campaigns.

Expand Marketing Channels Through

Utilize the power of the Internet to increase your marketing reach and
effectiveness.

17

In addition to supporting traditional marketing and demand creation channels

such as direct mail and tele-business, many vendors are enhancing the
integrated closed-loop marketing application through relationships with several
strategic third-party vendors. The combination of these applications will expand
the automation of the marketing planning and execution process over multiple
deployment channels and sales models, specifically through the Web. By
leveraging the Web as a channel, Marketing applications will help companies
capitalize on this rapidly expanding opportunity to reach a larger audience with
their marketing campaigns.
The objectives for Service Applications offered by a CRM suite are as follows

Service Increases Profitability

Create a profit center out of your service organization using operational and
customer information to reduce costs and generate more revenues.
Service application enables organizations to reduce costs by providing a
comprehensive closed loop support and service information management
system.

Its

comprehensive

resource

management

capabilities

enable

organizations route the calls to the right agent to reduce call resolution time. Its
enterprise wide customer management ability enables you to reduce billing time
with built-in integration between contracts, warranties, resource usage and the
billing system. Further, with interfaces to customer care, organizations can track
total customer contact history to increase customer knowledge and reduce
redundancies and resolution time. Fast parts rotation enables reduced inventory
levels and therefore, reduced costs.

Service Improves Service Delivery

Create an efficient and effective service business using integrated enterprisewide information available in other Front Office and ERP applications.
Many of the features that increase profitability also streamline and improve
organizations service delivery. Service Applications provides complete support
for the aftermarket service cycle enabling companies to improve response times

18

by sending the right engineer to a field service call, or improve customer service
by routing a support call to the agent trained in supporting a particular product.
The Customer Care features of Service Applications also provide the customer
management information to allow agents to respond to a variety of customer
inquiries during one call without transferring the customer from person to person.

Service Helps organizations to Delight Customers

Provide

enhanced

customer

care,

service

and

customer

information

management across your organization to improve customer satisfaction and

loyalty.
With an end-to-end Customer Care and Service Solution, Organizations can
achieve a full 360-degree view of their customer. This translates into better
response to customer's needs; an ability to extend proactive customer
management programs as well as have the information at your disposal to better
understand the customer. Service applications also track all product defect
information, which enables organizations to proactively manage customer issues,
so that they are well informed and can also accurately inform customers of
service issues. The built-in self-learning knowledge base enables companies to
leverage employee knowledge and achieve skills transfer, increasing employee
retention and reducing customer churn. Additionally, Service Applications enables
organizations customers to communicate with the company though many
different venues, web, call centers, and directly with Field Representatives,
offering customers flexibility in interacting with the company. This integrated
customer contact capability ensures that the organizations customers receive
consistent service and information, thus reduce his need to turn to one of the
competitors for new products or services.

Service Helps organizations Differentiate their Product

Distinguish business by offering service as a differentiator using multiple channel

communications with customers, full enterprise wide view of customer
information.

19

As products become commoditized, the next purchase decision customers make

is increasingly based on either the quality of service or the perceived care they
receive from the company. Service Applications by enabling both improved
product service, and customer care, help organizations provide their customers
with a positive experience in dealing with the company, maximizing the likelihood
of additional product purchases.

Service Applications Grows Companys "Share of Customer Wallet"

Service Applications help to leverage expanded business opportunities extending

beyond companys service needs, as well as tailoring the service offering to
specifically address any customers needs.
Service Applications provides companies to turn support service into a high
return profit center. Service enables the company to attract new service market
opportunities by servicing third party products with its ability to track competitive
products and service repair information. The Companies can also anticipate their
customer needs and proactively build and sell new support and service offerings.
Further, they can tailor Service Contracts individually, by customer, by product or
by business, enabling new revenue streams with customized service.
Additionally, they can also maximize the logistics and costs within their expanding
service business with integrated sales and spare parts forecasting.
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 endconsumers, distributor consumers, or business-to-business customers.

20

Table 1 presents various types of CRM programs developed for different types of
customers.
Customer Types
Program Types

Mass Markets

Distributors

Continuity
Marketing

After- Marketing

Loyalty Programs

Cross-Selling
Permission

One-to-One
Marketing

Continuous

Business
to
Busine
ss
Markets
Special

Replenishment

Sourcing

ECR Programs

Arrangements

Customer Business

Key Account

Development

Global Account

Strategic

Marketing

Personalization

Partnering/

Affinity Partnering

Logistics Partnering

Company-

Co-Branding

Joint Marketing

Marketing

Partnership

Co-Design

CoDevelopment

Table 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 frequency marketing, interactive
marketing, and after marketing programs in order to develop relationship with
21

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.
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.

Human resources decisions are also important in creating the right

organization 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.

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.
22

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 adds 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,

Internet

websites,

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 placed an order on the Internet and subsequently

23

calls the call center for order verification expects the call center staff to know the
details of his or her order history. Similarly a customer approached by 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 center 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 frontline 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.
24

Internet

Sales Group
Knowledge
Output
Data Input
Knowledge
Output

Market
Development

Data Input
Knowledge
Output

Data Input

Integrated Marketing
Information Platform
Information Content
Relational Databases
Decision Support System
Active Intelligence
Business Rules
Collaborative Communication
User Profiles

Knowledge
Output
Data Input
Knowledge
Output
Data Input

Knowledge
Output

Data Input

Marketing

Call Centre

Customer
Operations/
Service

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 focused 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

25

unintended deterioration in customer relationships. Appropriate strategy and

excellent implementation are both needed for obtaining successful results

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 revenues come 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

26

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 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.

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 framework for 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

27

 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 2004, 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 are 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

28

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 center for free!

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.
Call Center 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 an 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 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.

29

Systems Integration

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.
Fig 7: CRM A FRAMEWORK

Traditional Approach to CRM

Web-Enabled & Integration

Approach

Customer Contact by

Telephone

Mail

In Person
Personal Selling
After Sales Service
Complaint Handling
Account Management
Customer care
Customer Satisfaction

Customer Information
System
Customer Database
Electronic Point of Sale
Sales Force Automation
Automation of Customer
Support
Call Centers
Systems Integration
Lifetime value of a Customer

Integration with
technology
(Web & Internet)

Data Mining for CRM: Some Relevant issues

30

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.
Analytical CRM

Operational CRM

Collaborative CRM

Customer

Fig.8 Interactions between 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.

Individual level information consisting of:

31

 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
customer of the retail store are segmented by profitability criteria, we obtain
clusters who are profitable to various extent. 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 on basis 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, colour 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. A salesman can encourage him/her to try out the product if
his/her profile matches that of the current product users.

32

The Individual or Micro level

As interactions of the individual with the firm increases, the firm obtains more data
about him/her. Offering individualized value adding propositions can strengthen
relationship with the individual customer. For this, we need to track the cu and
mine at the individual or micro level. Some important features to note about mining
at this level are:

Micro-level mining provides specific information about a particular customer.

For example, the retail store can go to the extent of finding out the preferred
colours of his shirt

A firm takes up micro level mining to build a detailed customer profile of a

regular customer.

Data mining this level might be expensive if the data mining tool has to cull
out individual information from a large database. Having a separate database
for profitable customer might be helpful.

Knowledge obtained at the individual level is useful in situations where:

The firm wants to customize its offering to the customer based on the customers

tastes and preferences e.g. the retail store can offer discounts on the purchase of
a bundle of products that the customer prefers buying together.

The firm wants to assist the purchase of a new product based on the information

it has of the last purchase. For example, if a customer has bought a suit in his visit,
then the store might offer a discount on the purchase of a tie of a matching colour.

The firm wants to take advantage of the personal events in a customers life (e.g.

birthdays, anniversaries, birth of child etc.) to further cement the precious

relationship.

Current patterns that go against usually observed customer behavior point to

interesting phenomenon. If retail customer suddenly switches brand then he/she

might not be satisfied with the last purchase.
The most common operations used at this level are: 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.
33

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
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 nonstocking of a popular brand.

34

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 organisation 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 Centres, Field Service

Sale management and support

Internet Customer Service

Market Analysis

Service Interaction Centre

Internet, Tele marketing

Business Partner Collaboration

35

Product and brand management

The Customer focussed organisation: 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.

Data
Warehouse

Legacy & Operation

Extract & Transfer

Risk Cube

FP&A
Cube

Mktg &
Sales Cube

OLAP Tool

Fig. 9: Data Warehousing Solution

36

Campaign
Mgmt

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 plugin 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 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, deduplicate.
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 Centres, 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

37

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 messaging, offers and channel delivery. It synchronises
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 organisation 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
38

2. Enterprise
3. Empowerment
4. Economics
5. Evaluation
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 organisations 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

39

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
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 stovepipes. 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 solution

CRM applications are a convergence of functional components, advanced
technologies and channels. Functional components and channels are described
below:
Sales applications

40

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; list generation and management; budgeting and
forecasting; collateral generation and marketing materials management.
Customer service and support applications.
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.

Chapter 4: Organising for CRM

Assessing Need
How do you know your business requires CRM?
It is very easy for a business to get caught in the latest customer trap when it is
being driven by the information technology (IT) market. Every business does
require CRM; the question is to what level?
Trends
Many businesses are pushed by the current trend to change their business
strategy, especially around CRM. There are basically three trends that effect a
business:
Consumer
The customer is an ever-changing image, to be really successful with CRM you
must recognize the customer trends that are effecting the business.
If a business does not understand a customer profile and the changes that have
occurred then it is not possible to provide true customer relationship
management.
Products
41

It is the business providing the products that meet the changing customer trends.
Products need to be reviewed constantly perhaps enhanced or even removed.
Supermarkets are a perfect profile to look at for viewing product trends, they
constantly add and remove products and they constantly view customer buying
profiles and set out the pattern of the store to meet the strongest buying trend.
This may not always be by using the latest technology, it could be by just
reviewing shells at the end of the day, but the super market is at the minimum
watching for the two basic trends in CRM.
Technology
Ensure that the business is ready to install the new technologies, is the customer
data upto it, or is it time to start again? Do you need to review every technology
being used or just one area. Will it assist the business, is it going to grow with the
business requirements or is the technology just another trend? Relationship
management should not be an alternative to existing functions/technology; it
could be a logical extension to enhance those in existence, though it could
radically change some of the operational processes.
Is your Business ready? Are your customers Ready?
What are the costs, monetary, time, people and long-term issues?
Does CRM really matter?
Whatever the business activity is all companies have to ask themselves is CRM
the real factor for their company to succeed. Some customers do not need longterm relationship with their suppliers; therefore only minimal information is
required from that customer. That however is still a form of CRM. Other
companies have high quality and high value customers that they need to know
information about, they need to provide exceptional service, the pedigree of
CRM.
Whatever the business is, if it has customer it has to ask, does customer
relationship management matter? What does it man to them in business terms?
At what cost? What is the overall loss if not adhered to?
42

CRM: Yes it does really matter the strategy needs to last, be constantly
reviewed and can evolve over time.

Chapter 5:Financial Framework for CRM

There are organisational constraints encountered in execution of CRM programs.
Mainly they are as follows:
A mismatch between resource allocated and service levels desired for building
customer relationship
Absence of financial business case and ROI for investments in Customer
Relationship
Horizontal non alignment of organisations to customers line of sight
Balance to be achieved between maximisation of revenue and customer
satisfaction.
Direct selling machinery would have costs that are significantly higher than
referral sale hence the need to invest in customer relationship with an eye on
acceleration of referrals so as to bring down costs or increase productivity of
sales. (higher cold call to order ratio) . Figure1 illustrates the phenomenon that
organisations can drive referral sale line in a manner that can reduce time T1 and
with that in figure 1(a) the overall unit selling cost (average of direct sales cost +
referral sale cost) can be reduced with higher sales productivity.

43

100%

% 50%
of
overall
sale

Composite Costs

100%

Direct Sale

Unit
Selling
cost
Referral Sale

T1

Time

T1

Time

Fig. 1. Torpedo Graph

Fig. 1. (a) Sale Cost Line

Figure 2 illustrates that with a given investment in direct sale channel the
productivity can at best be only slightly increasing line, while a referral line will be
an exponentially increasing trend line with growing subscriber numbers. This
creates a multiplier effect that quickly overtakes the direct sale numbers.
Organisation dependency on direct sale can gradually be reduced since they
stand to account for reduced numbers in the overall sums.
Direct sale

Sale
Unit
No.
Referral Sale

Time

Figure 2

T1

Organisational measure of referral propensity can be taken through customer

feedback on their willingness to recommend the product to their friend and
acquitances.
Data of Likelihood to Recommend from Kerela market of Escotel subscriber is
illustrated below. This is based on face to face survey conducted through
independent market research agency on a sample base with >95% confidence
level. Company commissioning the survey was identified to the respondents.
1999

2000

2001

2002

71%

78%

86%

86%

44

Impact of referrals was measured as a part of six-sigma improvement team

working on Sales productivity improvement. Order conversion rates from
various sources of lead generation was taken and the results are as follows
Method

of

lead Sample Size

Conversion Rate

generation
Cold Calling
2210
3%
Database
1674
1%
Referrals
352
29%
Organisation/selling channels have to individually draw the sale cost line for their
products. This will determine saving rate impact through referrals and can serve
as a decision point for how much investment should be made for tracking &
accelerating referrals.

Chapter 6:CRM in select Services

1) Taj Air Caterers & Singapore Airlines

Taj actively participates in product designs and influences service design,
wherever necessary. This has evolved after getting an insight into Singapore
Airlines customer profile and their needs. He product is designed to reflect their
passengers preferences, which are quite different in Delhi and Mumbai, and on
different sectors ex-Mumbai. TAJ Chefs conduct an annual workshop on Indian
Cuisine for Singapore Airlines caterers worldwide. Taj staff gets trained at
Singapore Airlines catering subsidiary, SATS. Taj Ctareres share a lot of
information and can access technology issues with Singapore Airlines.

2) Taj Air Caterers & GE Capital Services

There is e-mail connectivity between the service provider i.e. Taj and GE
(for canteen and food supply). Taj customer relations responds within a stipulated
time frame directly to GE employees and analyses their satisfaction. Also on cards
is a fitness program where tajs experts will share information of food nutrition,
exercise, etc with GE staff. Similarly, a loyalty program is being designed where in
45

for purchases snacks and confectionery, GE employees can obtain attractive

discounts at Taj outlets/hotels. With another company Taj is involved in cafeteria
design and selection of equipment.

3) Titan Watch Repair Services

What did Titan Do?
The Titan Signet CRM initiative was undertaken in May 1995 to provide that extra
touch to its special customers at the exclusive World of Titan stores.
Its mission was to create a sense of belonging of the customer to the store
and vice versa by:
Building a special relationship with high life time value Titan customers
Recognizing and rewarding his/her loyalty to Titan
Providing a platform for direct feedback from these valued customers to
the company
Where?
It initially started in 6 showrooms in Bangalore. Today the titan Signet has been
extended to 102 World of Titan showrooms across 59 cities all over India
Behind The Scenes
While the program has taken customer bonding one step further in Titan, there
are many behind-the-scene activities that ensure that the program is run
efficiently, effectively and with the level of enthusiastic participation. These are :
Showroom Personnel are trained not only in the preparation of the
program at the showroom but also in the finer details of CRM.
Enrolments in the program are tracked on a monthly basis for each
showroom, along with data on purchases made by Signet members who
have returned to the showroom to buy again.
Signet operations form a part of the quarterly appraisal for their
showrooms, there by ensuring that they earn more marks on their efficient
and effective performance.
46

 A grievance redressal system is in place to ensure that out valued

customers are responded to within stipulated time frame.

47

Chapter7 BUILD CRM SUCCESS STORY

One of the most important aspects of implementing a customer relationship

management (CRM) system is ensuring that it meets the expectations of a
variety of audiences within your company. Top managers want to be sure they
will get a positive return on their investment in this new system. The information
technology (IT) professionals want the system to work within the current
technology platform and want to make sure they can fit this new system into their
backlog of other projects. Your salespeople must be motivated and encouraged
to use the system while trying to meet sales goals. More than 65% of CRM
projects fail to meet expectations, so all of these concerns are valid. To make
sure failure isn't the outcome of your hard work in building a CRM system, think
through the consequences of the system from every angle. Here are some ways
to do just that.
Start with a clean slate, as if you're designing and selecting your first
system
Don't try to fit your current system to your new needs. If you do, you'll end up with
quick fixes rather than true solutions. When designing your system, think about
what will make the most difference in your organization. What's missing now? Are
you looking for speed, ease of use or low maintenance costs?
CRM systems track sales contacts and potential sales schedule appointments
and calls so they don't fall through the cracks, keep notes and print out reports.
They can also play a part in product development, targeting the right audience
and shortening the sales cycle, and they can help your salespeople give
dynamite presentations. Identify the most important of these features and
priorities for your new system.
Write down exactly what you want your system to do for you
Write your list from the perspectives of everyone affected by the system -salespeople, sales managers, the CEO and the IT department. Look at your
sales processes as well as the technology.
48

Take time to put yourself in the shoes of people in your organization

In order to design your new system from the perspectives of everyone affected,
you need to get their input. Live a day in the life of several of your salespeople.
Go with them for a whole day, if possible. Watch them work. Ask questions.
Choose at least one sales star, someone who's been there a long time and one
new salesperson. Do the same for your sales managers, regional managers,
CEO, CIO, customer service people and telemarketing people. Ask them their
ideas, and take them seriously. You may want to ask the following questions:
what do you want the system to do for you that the current one doesn't do?
what are the top three challenges you face in your work?
what would make it easier for you to make money?
what would make it easier for you to do your work?
what are the top challenges your customers face?
Be as complete and detailed as you can. Then, after you've made your notes
about their answers, call in your CRM team and compare notes. Only after you
and your team have done your homework can you call in consulting and software
companies for sales presentations. Getting everyone's perspectives is important
also because you will be "selling" them the new system; software, consulting
company and your implementation plan at some point. Sales are a major
component in CRM system implementation and project management. Often, the
people doing the implementation and project management are not salespeople
and have had little exposure to selling or selling skills. A successful
implementation requires that many people agree to do things that are on your
agenda; however, these things may not be on their agendas. Your job is to sell
the system throughout its implementation. A workshop, course or refresher in
selling skills will give you tremendous payoffs as you go ahead with your new
CRM system. Before you speak with them, list the reasons these same people
won't want a new system. What will cause resistance? For example, a new
system means change. People are usually more comfortable with the way things
currently are, even though they can see in their minds that there may be better
ways to do their work.

49

Identify the success criteria for the project

Define exactly what the system and the implementation will be measured on. For
example, you might write:
Do salespeople like and use the system?
is management getting the reports they want?
Are there increased sales? By how much? How will these happen?
will there be more calls and more meetings?
Be careful here. "Increased sales" is too vague. To build success into your CRM
implementation, you want to include specific, measurable goals. For example,
you could decide one criterion should be "Sales should increase by XX% one
year after implementation," or "Salespeople should contact twice as many people
as they did last year."
Identify the project killers
List them so you will be more aware if these red flags appear. To carry through
with our example, if salespeople liking and using the system is important, a
project killer would be that the salespeople aren't using the system. There could
be other project killers that aren't part of your success criteria, too: There might
be interdepartmental synchronization problems (i.e., projects not done on time or
according to plan).
Once you've designed your "ideal" system on paper, find out how other
companies managed their projects
Learn from their experiences. Look for descriptions of successful projects. Look
for companies in similar businesses or companies that have solved some of the
challenges you want to solve with your system. Call them up and ask questions
such as:
what advice would they give as you start your project?
what would they have done differently?
what were their key reasons for selecting the system, software and consulting
company?
what were they most satisfied with?
50

 who did they include on their implementation team?

Ask to visit and see exactly how their systems work. Talk about their projects and
how they made their decisions. Ask their advice.
Critical Success Factors
When properly implemented, CRM offers significant competitive advantages.
Why, then, do 70% of these solutions fail? Broadly speaking, the failures of CRM
can be linked directly to any of the following critical success factors:
Executive Sponsorship
Without executive sponsorship a CRM project will inevitably fail. Each of the
constituents (Sales, Marketing, Manufacturing, etc.) has an inherent belief that
they are the most important department in the enterprise. Without a strong
executive sponsor taking responsibility for the final sign-off of the completed
system, the inevitable result is that strong-willed committee members will shake
the final implementation to reflect their desires for their department or division.
Conceptual Model
The first step in any successful CRM implementation is to have senior
representatives of each constituency in one room and have the executive
sponsor or their designate construct a conceptual model of what the final
outcome of the implementation should accomplish.
Budget
CRM is not inexpensive. However, nothing is more expensive in terms of time
and money than a failed CRM system. A detailed cost-benefit analysis should be
undertaken prior to the requirements gathering, and the implementation should
be budgeted and funded prior to commencement.
The devil is in the details. If accurate requirements for all constituents of the CRM
system are not analyzed and documented, a compromise will be reached that will
satisfy nobody. This is one of the reasons that it is extremely important for the
executive sponsor to describe the aforementioned conceptual model.
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Data Mapping
The foundation of a CRM system is a relational database that contains customer
information with multiple data elements that represent a 360-degree view of the
customer. Therefore, it is essential to conduct an extensive data mapping
exercise for all of the potential end-users of the system.
Product Selection
Only after these prior critical success factors have been established can the
selection of a product take place. In the world of CRM it is less important to find
out whether a vendor has served 10 companies in your industry versus whether
they have served 10 companies that have the same type of processes that you
have.
User Buy-In and Testing
Typically, the enthusiasm level for a CRM solution will vary widely across an
enterprise. It is key to involve the enthusiasts in each step of the development
and testing, and to ask for their opinion and suggestions. It is important to
remember that they know their department needs better than you do. Managing
expectations is the key to acceptance.
Eventually the CRM solution, phase by phase, will be ready to roll out to the user
community. Do it carefully and in a timely manner. Handling user resistance takes
time and patience, but given in-depth planning, the correct personalities, and a
flexible user-friendly system can ensure success.
One of the most important aspects of implementing a customer relationship
management (CRM) system is ensuring that it meets the expectations of a
variet0 of audiences within your company. Top managers want to be sure they
will get a positive return on their investment in this new system. The information
technology (IT) professionals want the system to work within the current
technology platform and want to make sure they can fit this new system into their
backlog of other projects. Your salespeople must be motivated and encouraged
to use the system while trying to meet sales goals.

52

Case Example: Air India

Worlds largest DIRECT MARKETING ASSOCIATION recognizes AIR INDIA as
first airline to use a unique database-driven CRM approach that set new
sales and profit records in the air travel market.
On June 5, 2002; at world headquarters in New York, Charles A. Prescott, Vice
President of International Development for the United States-based Direct
Marketing Association, approved the addition of Air Indias database-driven Direct
Marketing program to DMAs Web site. Entitled

Test of Advanced CRM

Approach in India sets new sales records for an Airline it instantly became one of
the most visited parts of the DMA Web site.
Why? Because Air India created an intensely personal dialogue with each
individual customer in a way no airline ever had in the past. Personal dialogues
which created relationships, which produced record gains in Share of Customer,
and overall Share of Market as well as revenue and profits. When Abeer
Chakravarty and his DM agency colleagues tested Dick Shavers unique
Database-Loading Research Process (developed in the early 1990s in the USA)
for Indian Airlines in 1998, 58,000 customers answered extremely detailed
questions about themselves. Everything from their specific air travel habits,
business and personal travel wants and needs, services they expected to get
from an airline and services they would like to receive from an airline in addition
to crucial information about their air travel destinations, frequency and airlines
flown as well as all their personal demographics and psychographics. In short,
everything airline marketers worldwide had always wanted to know about their
customers, but really never thought possible to get.
Indian Airlines immediately computerized each customers detailed answers in
order to begin the Consumer Guided dialogues they had told customers about.
Within days, every responder received a personal letter based on what each
53

different customer had told IA. This new ability to write always-relevant,
customer-specific letters rapidly expanded, in a few months, to 22 different
individualized letter versions. Airline customers in India loved being treated as
individuals in the late 1990s and early 2,000a just as much as pharmaceutical
and telephone customers in the United States had loved being treated that
way in the early and mid-1990s. Not only did Database-Loading Research put
them in total control of their personal information and hence their privacy it also
insured they would never again be bothered by irrelevant contacts while, at the
same time, they would never miss out on any offers that fit their specific interests
which they really did want to know about.
In each country and each different market health care and long distance
communication in the States, air travel in India after their initial surprise at
being listened to and then responded to based on what each one of them had
said, customer satisfaction soared to historic highs. New highs in satisfaction that
produced multi-year, multi-billion dollar industry records in customer retention
and acquisition for Marion Merrell Dow and MCI in the USA and multi-year, multibillion rupee gains for Indian Airlines across its proportionately smaller market in
India.
All of which reflects the simple fact that this new CRM approach, called
Consumer Guided Marketing, can produce unprecedented gains in any market
and any country in the world, because the gains it generates are rooted in human
nature: due to Quantum Leaps in customer trust and satisfaction. A new level
of trust and satisfaction evidenced in the tens of thousands of unsolicited letters
from customers that essentially said, Ive been filling out questionnaires for
years, but nothing ever happened! But you actually read what I said and then
wrote me back based on what I told you. I love it!

54

Case Study 1: The Case of the Pharmaceutical

Industry
Building Relationship with Doctors for Effective Marketing

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 organised and the
unorganised market vying for a piece of this pie. It is a very fragmented market
with the number one player, Glaxo Wellcome, 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.

Starting a CRM initiative

Having understood the major characteristics of the industry, the identification,
differentiation, interaction and customization (IDIC), model as suggested by Don
55

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 stockists, 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 organises a national

level conference every year where members from all over the country attend.
Details can be collected through the sponsorship of the front-desk; organising
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.

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. Continuos additions, updations and deletions are always
taking place.

56

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:

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-today

interaction

with

his

customers.

questionnaire can also be administered.

57

Alternatively

formal

structured

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, attendence 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?

Customisation
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 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 ofcourse!
But more important to customise the interaction with the doctor based on the
data we have on him. Gifts based on the interests and hobbies can be presented.
58

If a doctor has expressed interest in national conferences of his specialty the

same can be arranged.
The success of the whole programme 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 programme
The next obvious step is to have a loyalty programme as a frequency marketing
initiative. An ideal loyalty programme 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 programme based on the redemption of
these points.One approach would be to set the whole programme 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 programme 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 programme and more importantly convey the
exclusivity of the programme. The doctor has to be made to realise that he is the
chosen one. All activities and inputs should only reinforce this communication.
The success of such a programme hinges on making the doctor covet the
membership to the programme. Thus a continuous monitoring is required of the
returns generated from the doctor. If they fall below a predefined limit then the
doctor can be downgraded and his privileges reduces.

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
59

captured are the contact address a program through mail is easiest to

accomplish. Brand awareness mailers, new launch, 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

specialisation 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 specialisation 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 realised 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 with doctors is being tried. It is especially useful for
targeting higher specialties, which is more technology savvy and information
hungry.
Call Centre
In case of chronic therapies like hypertension, serious conditions like AIDS and in
hitherto unknown conditions (atleast in India) like erectile dysfunction the call
centre provides the answer.
The medium lends an ear to three types of customers
1. Doctors, who would like to more about the drug profile, discuss a specific
case, ask for a reference on use in a specific condition.

60

2. Patients who seek counseling, the nearest physician or chemist shop. The
telephone provides anonymity to the caller especially when discussing taboo
subjects
3. Retailers asking for pricing details, product availability
With the advent of paging companies who can provide a single number nation
wide, facility of leased lines from DOT and the toll free numbers in select metros
this medium is set for take-off.
There are certain factors to be borne in mind whilst setting up a call centre. The
sheer diversity of the country means that callers would speak different languages
and may not be comfortable with English. This is especially relevant if the centre
would cater to calls from patients. Also doctors would not prefer their queries
being answered by a lay person without any medical knowledge. Thus most
medical queries have to be escalated to a qualified physician who responds to a
doctors queries within a set time limit.
These limitations notwithstanding, the call centre is an excellent medium to come
closer to the customer and pharmaceutical industry is realising the potential.
Measurement Systems
The measurement system would require studying the prescription profile of the
doctors who are being exposed to the CRM programme vis a vis a control
sample who are met 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 programme 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 programme. This method would
at best provide a qualitative idea but would nevertheless give an idea of the
success or failure of the programme.

Conclusion
The importance of internally marketing the CRM programme is very important.
The success of the whole programme hinges on the support of the top
management who can act as a mentor. The programme takes time to take off
and much more time to actually show results.

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Case Study 2: The Case of Indian Rayon

Relationship Building in Cement Industry

Indian Rayon an Aditya Birla group Company, was one of the first cement
companies which felt the need to gain this immediate distinguishing factor and
further long run equity by using CRM as a strategy.
The company wanted to bring about a transformation in the way in which it
interfaced with its customers. Dealers being the interface with the customers
were identified as one of the major areas in this direction.
The company consciously worked on the aspect of maintaining long term
relationship with its set of customers and came out with the conclusion that if the
user-customer can build long-term relationship with the distribution channel (and
thus the company) of Indian rayon cement Products, this will be a major gain in
the overall strategic marketing objectives of the company and also it will provide
the company a distinct positioning.
Indian Rayon decided to upgrade select dealers to become Birla Super
Shoppes. The intention was also to make the retailer go beyond being a mere
sales channel. The Birla Shoppes were geared to become Centres for what the
company prefers to call technomarketing service and relationship outlets
focussed at maintaining long term relationship with its customers, which no other
competitor can offer.
The idea of building relationship with the customers through this unique route
came after studying the buying behaviors of customer more closely. For one, the
customer base was not homogenous there were different categories of cement
buyers in the market; the mason, the civil engineer, the architect, the contractor,
and the institutional or large-scale buyer along with the end user.
While each of its customers has some degree of knowledge and practical
experience of the products quality and usage, there was a latent need for
technical information and advice before purchase. In most cases though this
need was never addressed, simply because the dealer himself did not know
62

much. At the same time most dealers tended to stock multiple brands were more
concerned with pushing their stock then spending time explaining the exact
details of any brand.
Each of these Shoppes had a qualified civil engineer that offered free technical
consultation to every customer. Customers were provided with comprehensive
information right from manufacturing of cement to its application in various end
purposes. Based on the type of construction, the right type of cement along with
the free advice on the usage of cement and other additives and building
materials. To further consolidate customer relationship each shoppe a regular
Mason Meet where the actual users are invited and given technical and
practical knowledge and solutions. Besides the shoppe owners of a particular
area also get together once a week on an average for market and technical
information sharing.
Here the differences are ironed out and collective strategies shaped. The
company involvement manifests through the regular seminars and training
programs that are organised for the shoppe personnel.
Indian rayon has been successful in achieving results on twin fronts of CRM:
a) Consolidating Relationships with the customers through the unique
distribution channel route.
b) The company has also been able to strengthen bonds with its distribution
channel (who is also amongst the companys customer groups)

Conclusion
To conclude, CRM in cement industry although in a very nascent stage has
strong strategic connotations. CRM is a strategy towards the marketers objective
of providing value to its customers. This value when translated is able to provide
a distinct equity to the cement marketers to stand apart and gain an edge in the
clutter of intense competition, and relatively undifferentiated products which is
peculiar to the cement industry.

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Case Study 3: Hospitality industry

The hotel industry is fast adopting the latest technologies in a big way, thanks to
increasing competition. Chitra Padmanabhan observes that technology acts as a
key differentiator to retain international clientele0
Badly bruised by the September 11 attacks and the ongoing slowdown, the
hospitality industry in India is increasingly taking the help of technology to not
only cut costs but also lure customers. Today, guests in most five star hotels can
access the Internet through their laptops at the poolside or in conference rooms,
with equal ease, thanks to wireless LAN (WLAN). Innovations like these that
seem like technological marvels today will be commonplace tomorrow, as almost
all leading hospitality chains will provide wireless connectivity.
Goingback
In days gone by it was said that in order to succeed, all a hotel needed was a
scenic location and good cuisine. But in todays competitive environment, a
mistake as trivial as not taking down a customers order can prove disastrous. As
the hospitality industry started looking for ways to improve efficiencies, efforts
and investments in the field of information technology intensified. One of the first
deployments of IT began at the front desk when receptionists began checking the
name of the customer and then allotted a room to him. Big hotels also started
putting in place accounting systems and back office software to improve
processes. As hotel chains started expanding their operations across the country,
it was necessary to monitor their assets. This gave rise to the need for a Property
Management System which enabled hospitality groups to track their assets
across different regions.
During the same period, hospitality chains also saw the need for a centralised
system. This phase saw different hotels of a chain being networked and
connected to a central server. The Taj Group of Hotels, for instance, has
implemented a WAN called TajNet, connecting the groups 55 properties in India,
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Nepal and Sri Lanka. A centralised system has tremendous benefits. One, there
are greater economies of scale, especially when the group wants to announce a
special scheme for all its member hotels. Two, the group can monitor the
performance of each member hotel and summarise the sales performance of the
whole group.
Today, the IT initiatives of hotel chains in India have matured, and are being
increasingly fine-tuned to serve the needs of the customer. Says Pradeep
Khetwal, systems manager, Le Royal Meridien (Mumbai), Most hospitality chains
now realise that technology in the hospitality industry is critical to improve the
operational efficiency of a hotel. The industry has moved from the traditional
transaction-based processes such as check-in and reservations to features that
are built and designed specifically for the customer. Services like providing
wireless Internet access to guests will only increase in the future.
CRM
While IT initiatives like centralised management and automating daily operations
are important, the key part of retaining a customer is critical to the hospitality
industry, which explains why every chain is taking the help of technology to
improve efficiency. Take a look at Le Royal Meridien. The hotel has deployed a
check-in system on each floor depending on the guests profile. This has solved
the problem of long queues of customers at the counter, waiting to fill in details of
their preferences.
CRM is also being adopted in a big way by almost all the big hotel chains in
India. At present, every major hotel chain in India is investing in comprehensive
systems that store complete profiles of their customers. The moment a guest
checks in, he fills a form indicating his various preferences. If he is a regular
client, the hotel immediately knows of his preferences and serves him
accordingly.
Says Prakash Shukla, senior vice president, technology, and CIO, Taj Group of
Hotels, Every hotel has a major chunk of its revenue coming from its regular
clientele. We too recognise this and have deployed customer information
systems (CIS) to service the customer in a better way. The same CIS can be
accessed through any of the groups properties. A CIS enables the hotel to keep
a record of the exact profile of the customer and keep a tab on his preferences
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during his subsequent visits. CIS creates guest-centric processes that are
essential for CRM. And since it focuses on preferences, requests and problems
of different customers, it is a boon to the hotel management.
The same database is used to offer loyalty programmes to the customer. Most
hotels today offer a customer different schemes based on his profile. In the
traditional method, this was done manually with no clear understanding of a
customers preferences. But now, with knowledge of the customers history, a
hotel can service a customer more efficiently. Some hotels have even given their
regular customers unique IDs to enable them to check their loyalty points on the
Web itself.
Says Zahid Memon, systems manager, J W Marriott Hotel (Mumbai), Most
hotels know their customer preferences because relevant data can now be
procured from the systems as and when needed. Earlier, data management
systems contained only static information, which was used only to enhance
efficiency of the hotel staff. But today, with the help of analytical tools, we can
provide consistent service quality. CRM and software tools for front line staff have
enhanced successful one-to-one relationships.
In addition, most hotels have also embraced newer technologies with gusto. The
Taj group, for instance, extensively uses VoIP and video conferencing tools on its
internal network to cut communication costs.
Wireless-technologies
One of the best examples of the use of wireless technologies is the hotel
industry. Major hotels are betting on wireless services as a new lure for business
travellers who rely on high-speed Internet connectivity and wireless services to
conduct day-to-day business.
Initially, wireless technology in big hotels was traditionally confined to the guest
room, the business centre or conference rooms, says Ashish Kale, systems
manager, Renaissance Mumbai Hotel and Convention Centre. But as this
hampered mobility of a business executive, hotels started looking at using
wireless Internet services throughout the hotel.
Adds Khetwal of Le Royal Meridien, Wireless technologies deployed in selected
areas of the restaurant hampered mobility, and it was impossible to access the
Net in any of the restaurants and near the poolside.
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The Taj Group has already introduced wireless Internet access for its customers
at Taj Coromandel in Chennai, and is all set to launch this in Mumbai. Shukla
puts forward a very valid point: As in any industry, one has to realise that though
different technologies are available, all of them are not beneficial to the endcustomer. One has to realise that as customers change their preferences and the
way they want to interact, we too have to change with them. Going forward, a
hotel which understands a customers needs and fulfils it satisfactorily with the
help of technology would obviously be a preferred one.
Another significant use of this technology is seen in wireless-equipped handheld
phones called digitally enhanced cordless phones, which serve the purpose of
tracking a person anywhere in the hotel premises. This phone is especially useful
for mobile staff who can attend to a complaint immediately.
Online-reservation-system
In the dot-com phase, hotels were attracted to the Web and were expecting
major revenues to come from online reservations. But just like other industries,
hotels too have been disappointed. Today, websites of most hotels serve only as
information outlets, and almost no bookings take place through the Web.
One obvious reason is security, which makes customers reluctant to reveal their
credit card details on the Web. Says Shailesh Bhagwat, EDP executive of Orchid,
Proper security systems are a must to avoid fraud in non face-to-face
transactions. Though most hotel chains offer customers a secure way of
transmitting data, it will be a long time before customers accept this.
The-way-forward
Wireless communications and mobile computing technologies are changing the
way hotels manage information. In addition to this, strategic decision making
coupled with an ability to access information, analysing it and distributing it would
be the key to increasing productivity and reducing costs. Going forward, hotel
chains could increase the number of value added services without major
investments in IT budgets.

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Conclusion
Software is to India what oil was to Gulf. It is therefore no surprise that the Indian
companies are jumping into the CRM bandwagon to seize a chunk of the global
market, both products as well as services.
With is vast talent pool; India is fast becoming an important development base of
major CRM companies. This trend is likely to increase in the future. Call centres,
catering primarily to the American and European markets are coming up in and
around the metros. With the easing of infrastructure constraints, India is likely to
emerge as a significant player in this segment.
Adoption of CRM by Indian companies is at an infancy stage. The CRM enabled
companies include Modi Xerox, Tata Telecom, TVS Electronics, HP India, Tata
Infotech, Carrier Refrigeration, Tata Teleservices, Satyam Infoway,Planet M, and
EpicenterTechnologies among many others.
India even has a CRM Foundation in New Delhi, founded with the purpose of
assessing and improving CRM practices. Founding members include Tata
Telecom, Escotel, Modi Xerox, Global Groupware, AC Nielsen, Carrierr Airrcon,
and Motorola India, among others.

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Recommendations
CRM driven by the employees is most likely to succeed and hence CRM initiates
should ideally come from front line employees who are indirectly related to the
customers. A Customer-Centric Quality Circle could be formed in organizations to
facilitate this.
Companies implementing CRM should keep in mind that CRM is not Database
Management but a whole new way of looking at the business.
CRM concept could be extended with the help of Bluetooth and JINI with CRM
enabled devices who recommend self repairs and undertake self maintenance
with the help of online technicians.
The advent of 3G mobiles and WLL could help the companies keep a track of their
customers and offer them not only customized products and solutions but also
customized information and customized advertising.
Finally instead of just launching products companies could well form customer
groups who will wok with the company to develop a new product and will be
rewarded for the same.

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References
MARKETING MANAGEMENT -

Philip Kotler

MARKETING MANAGEMENT -

Rajen Saxena

www.crmguru.com
www.crmsearch.com
www.crmindia.com

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