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Every business unit emphasizes on spurting a long term relationship with customers to nurture its stability in todays blooming market. Customers expectations are now not only limited to get best products and services, they also need a face-to-face business in which they want to receive exactly what they demand and in a quick time. Customer Relationship Management is an upright concept or strategy to solidify relations with customers and at the same time reducing cost and enhancing productivity and profitability in business. An ideal CRM system is a centralized collection all data sources under an organization and provides an atomistic real time vision of customer information. A CRM system is vast and significant, but it be can implemented for small business, as well as large enterprises also as the main goal is to assist the customers efficiently. Usually an organization consists of various departments which predominantly have access to customers information either directly or indirectly. A CRM system piles up this information centrally, examines it and then makes it addressable within all the departments. Lets take an example of an international call center which uses a CRM tool called xyz and is integrated with a phone and a computer system or laptop. Now this system automatically perceives which customer is calling. Before the executive attends the phone the CRM system brings forth the customer details on the computer or laptop screen and also indicates what the opportunity of deals is with that particular customer, what the customer had already purchased or ordered in past and what is the probability of buying in future. Not only this, it can also highlight what all products best suit this customer. For finance department it may show the information regarding the current balance and for accounting department it may pop out the information regarding the recent purchases by the customer. All these pieces of data are stored in the CRM database and are available as and when it is needed. According to this example,CRM system provides a well-defined platform for all business units to interact with their clients and fulfill all their needs and demands very effectively and to build long-term relationship. Wangling this kind of relationship with customers is not easy to manage and it depends on how the systematically and flexibly a CRM system is implemented or integrated. But once its accomplished it serves the best way in dealing with customers. In turn customers feels gratitude of self-satisfaction and loyalty which results in better bonding with supplier and hence increasing the business. A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system which is also called an Opportunity of Business. The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. Customer Relationship Management strategies have given a new outlook to all the suppliers and customers to keep the business going under an estimable relationship by fulfilling mutual needs of buying and selling.
Origin of CRM
CRM originated in early 1970s when the business units had a manifestation that it would be advisable to become customer emphatic rather that product emphatic. Birth of CRM was because of this heedful perceptiveness. The famous writer and management consultant Peter Drucker wrote; The true business of every company is to make and keep customers. Traditionally every transaction was on paper and dependent on goodwill which created hindrance in clutching customers. People used to work hard in entertaining customers by presenting new products with astonishing services; they were ready to work overtime for grasping more and more customers for increasing business. This too resulted in customer satisfaction and loyalty up to some extent, but at the end of the day there was no such bonding or relation between the two to carry on with future business smoothly. Previously business was quite easy as it was mere a one-to-one dealing without any specific process. But with time, due to incoming complexities in communication, it found itself in troubled waters. Emerging of new strategies and technologies in global marketplace and a mammoth degree of competition in business, the approach needed to be changed to proactive rather than reactive. Origination of CRM turned out to be a piece of cake for all suppliers and customers due to its advantages. Customer relationship management came as a process that dealt with relationships with customers surpassing the whole business.
Originally customer relationship management was based on three major principles; shielding the current customers, fostering new customers and enhancing asset value of all the customers. With the advent of CRM which was integrated with high end software and technology, business perspectives were totally changed. A CRM system eventually emerged as consisting of company-full of information which is depicted sophistically to increase business profit and meliorate customer satisfaction and loyalty, on the same hand reduces business cost and investment.
The outgrowth in origin of CRM as a strategic approach is a result of some of the following important perspectives: 1. The belief that customers are the real assets and not just the people in the audience. 2. The maturation of one-to-one transaction advent. 3. Extensive use of software and technologies to maintain useful information and no manual labor. 4. The realization of the benefits of utilizing information proactively and not reactively. 5. The change of business view to relationship approach rather than transactional approach. 6. The approach of concentrating more on customer values rather than concentrating on how the product is delivered to the customer. 7. The approach of focusing on customer satisfaction and loyalty rather than focusing selfsatisfaction and profit. 8. The acceptance of the fact that using high end technologies and software the cost can radically be decreased without compromising on quality and service of products. 9. The increasing tendency to retain existing customers and trying to get more and more business out of them. 10. The realization that the traditional trends of marketing and selling are increasingly fading out in the current economic scenario. These additive approaches helped a lot in building up consequently the modern CRM. Today we have well defined and sophisticated CRM systems into being which are always in process of improvement.
Features of CRM
Customer Relationship Management is a strategy which is customized by an organization to manage and administrate its customers and vendors in an efficient manner for achieving excellence in business. It is primarily entangled with following features: 1. Customers Needs- An organization can never assume what actually a customer needs. Hence it is extremely important to interview a customer about all the likes and dislikes so that the actual needs can be ascertained and prioritized. Without modulating the actual needs it is arduous to serve the customer effectively and maintain a long-term deal. 2. Customers Response- Customer response is the reaction by the organization to the queries and activities of the customer. Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions. Success totally depends on the understanding and interpreting these queries and then working out to provide the best solution. During this situation if the supplier wins to satisfy the customer by properly answering to his queries, he succeeds in explicating a professional and emotional relationship with him. 3. Customer Satisfaction- Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. In todays competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with customer. 4. Customer Loyalty- Customer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the supplier and re-visits the organization for business deals, or when he is tended towards re-buying a particular product or brand over times by that supplier. To continue the customer loyalty the most important aspect an organization should focus on is customer satisfaction. Hence, customer loyalty is an influencing aspect of CRM and is always crucial for business success. 5. Customer Retention- Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business. Usually a loyal customer is tended towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business. 6. Customer Complaints- Always there exists a challenge for suppliers to deal with complaints raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the customer. There can be several reasons for a customer to launch a complaint. A genuine reason can also exist due to which the customer is dissatisfied but sometimes complaints are launched due to some sort of misunderstanding in analyzing and interpreting the conditions of the deal provided by the supplier regarding any product or service. Handling these complaints to ultimate satisfaction of the customer is substantial for any organization and hence it is essential for them to have predefined set of process in CRM to deal with these complaints and efficiently resolve it in no time.
7. Customer Service- In an organization Customer Service is the process of delivering information and services regarding all the products and brands. Customer satisfaction depends on quality of service provided to him by the supplier. The organization has not only to elaborate and clarify the details of the services to be provided to the customer but also to abide with the conditions as well. If the quality and trend of service go beyond customers expectation, the organization is supposed to have a good business with customers. Let it be a newly brought up enterprise or a well-established organization the above aspects prove to be of prime importance in dealing with a genuine customer through a well-organized CRM system.
y Awareness- Awareness is the process when the customer understands the motivational values of supplier or the products he sells. y Expansion- Expansion is the process when the supplier wins customers faith and customer falls under huge interdependence of the supplier. This is time when there are more chances of business with that particular customer and expand business. y Commitment- Commitment is a powerful stage when suppliers learn to adapting business rules and goal to excel. y Dissolution- Dissolution is a stage when customer requirement suddenly changes and he looks for better perspectives. This sudden change is the end of relationship. Relationship can come to an end due to many reasons like - customer is not satisfied with the services of supplier or customer diverges to other better brands and products. Suppliers can also prefer to break relationships due to customer failing to be a part to increase sales volume or when the suppliers are entangled with fraud cases. Broadly there can be two distinguished attributes of a developed relationship between supplier and customer: 1. Trust: Trust means confidence and security in any relationship and can be treated as the biggest investment in building long term relationships. Trust is developed between the two parties when they experience flawless and satisfied motives between each other. As a result of knowing more about each other, all the doubts and risks are minimized and leads to inevitably smooth business. Lack of trust on the other hand weakens the relationship foundation and chances of uncertainty and conflicts increases. 2. Commitment: Commitment is yet another milestone that should be achieved to set a long term mutual relationship. Commitment can only be attained when there is mutual trust and the two parties share each others values. In a committed relationship both suppliers and customers strive to uphold the relationship and never want to exit which in turn results in building the relationship stronger and sharper. There is, in fact, huge cost which is incurred in switching from committed relationships of one supplier and build new relationships with other suppliers from scratch. Relationship is always mutual or reciprocal so it is important for both supplier and customers to stick to common guideline to attain better relationship among each other. There is lot of involvement of cost, efforts and time in striving developed relationships between the two parties but the outcome is always inevitable.
5. Wandering Customers- These are the least profitable customers as sometimes they themselves are not sure what to buy. These customers are normally new in industry and most of the times visit suppliers only for confirming their needs on products. They investigate features of most prominent products in the market but do not buy any of those or show least interest in buying. To grab such customers they should be properly informed about the various positive features of the products so that they develop a sense of interest. 6. An organization should always focus on loyal customers and should expand or multiply the product range to leverage impulsive customers. For other types of customers strategies should be renovated and enhanced for turning out these customers to satisfy their needs and modify these types of customers to let them fall under loyal and impulsive category.
y Competitiveness: Customers assess the supplier through competition based on the pricing and quality of their products, its reliability, its technological background and industry trends. These factors affect the deal. y Innovation: It is difficult for the supplier to divert the customer from their quality assessment. Customer knows and lives the products more than the supplier does, as he is working on them and is in a position to suggest innovation and development for the products. y Finance: Suppliers have to be ready for providing financial advantages as loan, extended terms on purchases and postponement of debt when demanded by their loyal customers particularly at their growth stage or when they are into a financial crisis. On the other hand suppliers also have a right to get their needs met as they are ultimately motivated by profit. They want to be known as the best in their deals so they count on customer loyalty and satisfaction at all levels which translate into direct benefit of both of them. Therefore it is only win-win relationships between them in all stages of the customer-supplier chain to produce total satisfaction. It should be remembered that a customer assumes his name only in relation to his supplier. As such in order to be a valued customer to suppliers, here are a few things he should do: 1. Payments always on time. The customer should always negotiate for favorable payment terms before the deal is initiated. But once the order is placed, the commitment should be honored. Any problems arising in this regard should be properly dealt with to maintain the goodwill and benefits to earn. 2. Provide adequate flexibility. The customer should try to give suppliers as much flexibility as possible for them unless there is a compelling, competitive reason not to do it. Unreasonable demands should be avoided. This tendency also connects to quality production. 3. Personalize the relationship. The customer should always be in contact with the supplier and visit him frequently, not necessarily only when it is needed. He may also be invited to attend and give suggestions in some of their strategy meetings. Methods of improving business may also be discussed. Sharing of knowledge, opportunities, service benefits, software compatibility etc. would be beneficial for both. 4. Share information. The customer should be communicative by keeping the suppliers aware of what is going on in their organization. He may share some of the key strategic information with them. Frequent and open communications are important in understanding each others expectations. All relationships begin with self. 5. Be a demanding but a valued customer. Being a demanding customer can just be fair. The customer should state his demands clearly and tell his supplier to hold his agreements. At the same time as a valued customer he must always cooperate with him to keep up his commitments without embarrassment. Sharing knowledge, service benefits, media exposure opportunities, software compatibility, efficiencies etc. would add to enhance relationship. These essential factors are important for the customers to create and maintain a healthy relationship with the suppliers.
Hence, knowing about the customers price sensitivity always helps suppliers to entertain and satisfy them. If the customer is highly competitive and perceives short term projects, then it is not worth for suppliers to convince them for high end or expensive products. The customer will anyway supercharge to reduce the cost or cut the related frills as it may not be affordable or is out of budget for them to purchase. So it is important for suppliers to sacrifice on cost or else he may leave the customer unsatisfied, in worst case he may loose that customer also. Making fruitful strategies and positive analyzing cost sensitivity is one of the most important challenges that an organization could face. On the other hand it is desirable to deal efficiently with it. The best practice is to pre-evaluate the customer needs and make a fair offer to them according to their requirement and budget.
1. Customers: These can be existing customer or prospect customers. Customers are the most important and efficient sources for field research process and can provide following useful information: a) Useful information regarding competitors and new strategies they are going to implement. b) Present market trend. c) Actual and innovative market requirement. d) Market distribution channels. e) Production and consumption channels and product usefulness. 2. Competitors: It is difficult to fetch out information from own competitors but if this is possible then competitors are the basic and useful source of information and provide information regarding: a) Newer and upcoming technologies and software. b) Types of product which prominent and mostly preferred by customers. c) Efficient and affordable pricing strategies. d) Promotional efforts that could turn around the marketing strategies. e) Information of other ruling competitors. 3. Industrialists or marketing experts: These are the most knowledgeable personals who could provide in depth information regarding: a) The future trend of market. b) Economical imbalances regarding particular segments of products. c) New range of raw materials available in the market. d) New research and marketing methodologies and application of vibrant technologies. 4. Distributors and Suppliers: Distributors and suppliers are also very good source of information. They can provide information like: a) Availability of raw materials in market. b) Pricing details and negotiation techniques. c) Best distributing channels. d) New marketing processes. e) How to deal with compliance issues. There are many other less prominent sources like interviews, trade shows, and promotional programs etc. and much of the relevant information could be gathered from these sources as well. All the information gathered from the above sources is then manipulated and segmented. As in field research most of the information is relevant as it is actually gathered for a particular purpose, so regular round of work around on the data is not required. After validating the information it is then fetched into the CRM system and is converted into intelligent data which can be accessed on real time.
includes determining the missing values and inputting the most appropriate values in place. It is also important to maintain the quality of the analysis and compilation for which the ideal key is use reliable measurement techniques. Data sampling is also one more distinguished approach to decrease probability of repetitive data elements. It includes creating subsets of information according to a specific variable value and managing them as a whole. More the data is relevant the more accurate the results are. An organization must define all the objectives in accordance to market requirement. The results from the compilation and analysis of data and information are very important and significant for the organization and shows success factors. The result of the process also depicts the trend of the organization by determining weak and strong points and how they stand stood in the market. Hence, every organization should have an organized and sophisticated way of compiling and analyzing the information.
b) Technical- Automation of CRM strategies are important and must involve experienced technical hands. Also technical professional provide their useful contribution in building and managing software application and determining their compatibility with existing software features. c) Sales and Marketing- These are final users of CRM system once the strategies are determined and implemented. The applied strategies are supposed to be successful once these users fell comfortable and satisfied by using all the CRM features. Being the end users these people are also responsible to provide useful feedbacks on efficiency and effectiveness while the strategies are in development phase. d) Financial- The CRM strategies must also be gone through or evaluated under financial aspects. The financial professionals of the team can provide crucial analysis on assessment of enhanced productivity, evaluation of operational and production cost and final estimated cost of the project. They also help in assessing the investment cost per module or segment so that the product is delivered inside the budget. e) External Experts- Many times some external consultants and other CRM vendors are substantially helpful in strategy development. These are people who are generally hired or outsourced for second fruitful opinion or if the organization is lacking with sufficient CRM experts. These professionals have vast experience in the same field and helps analyzing organizations actual business needs, work with other professional to review and approve complex business structure and even helps in formulating the team members according to the expertise they posses. 3. Requirement Analysis- CRM strategies should always focus and concentrate on the actual business requirements. This process involves a series surveys and questionnaires with top level sales, marketing and financial managers to gather the actual expectations regarding the strategies to be implemented and what results these strategies will throw in the final stage. This is a very crucial factor in the development of an effective CRM system because if the results are not matching the actual requirement or if they diverge from focus points, then that means its not achieving the desired goals.
Operational CRM
Operational CRM is mainly focused on automation, improvement and enhancement of business processes which are based on customer-facing or customer supporting. The main importance of a CRM system lies on how the selling, marketing and service oriented processes are automated, and for which operational CRM systems are embedded with following major automation applications: 1. Marketing automation- As the name implies, marketing automation is basically focused on automating marketing processes. In marketing, campaign management involves marketers to use customer specific information to determine, evaluate and develop communications that are targeted to customers in individual as well as multilevel or multichannel environment. Campaigns developed to communicate customers individually are easy and involves unique and direct communications. For multichannel environment the implementation of marketing strategies and campaign management is quite difficult and challenging. For example, some retailers have multichannel transactions like shops or stores, wholesale stores, websites, home shopping and even television shopping. Here integration and implementation of communication strategy is difficult and evaluation of performance an quality of d campaigns needs to be automated and should be technologically sound across each of the channels. For handling this, a CRM marketing strategy called event-based marketing is inherited. Using event based marketing communication and offers are presented to customers as and when they are required. For example, credit card customer calls the call center for inquiring the current interest rates, this indicates that customer is specific about the interest rates and is trying to compare the interest rates and may switch to different competitor to find specific deals which suits him. Without wasting time the automated CRM system pops up an event of offer which is best suited for that customer and helps to retain him back. 2. Sales-force Automation- A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system. This process can be distributed into many stages which includes generation of lead and then qualifying those leads as prospects. The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. Automation of selling process is efficiently handled by Salesforce automation which automates all the methodologies or sales cycle and above described process sophisticatedly. 3. Service Automation- Service automation deals with managing organizations service. The actual interactions with customers such as contact, direct sales, direct mail, call centers, data aggregation systems, web sites and blogs etc. are examples of operational CRM. Each interaction with a customer can be collected to the client database generally known as customers history and the information can
later be used wherever necessary. Anyone in the organization can have access to this information about customer which gives a clear view of customers needs and important information on the customer such as products owned, prior support calls etc. It naturally eliminates the need to obtain this information individually from the customer. On the basis of the information, if required, the customer can easily be contacted at right time at the right place. Operational CRM refers to services that provide support for various front office business processes in helping organization to take care of their customers. Focus on customers value is important for a successful operational CRM strategy. Different customers have to be treated differently so information on variables like customers ranking, actual value and potential value is of strategic value.
Analytical CRM
Analytical CRM supports organizational back-office operations and analysis. It deals with all the operations and processes that do not directly deal with customers. Hence, there is a key difference between operational CRM and Analytical CRM. Unlike from operational CRM, where automation of marketing, salesforce and services are done by direct interaction with customers and determining customers needs, analytical CRM is designed to analyze deeply the customers information and data and unwrap or disclose the essential convention and intension of behavior of customers on which capitalization can be done by the organization. Primary goal of analytical CRM is to develop, support and enhance the work and decision making capability of an organization by determining strong patterns and predictions in customer data and information which are gathered from different operational CRM systems. The following are the key features of analytical CRM: Seizing all the relevant and essential information of customers from various channels and sources and collaboratively integrating and inheriting all this data into a central repository knowledge base with a overall organization view. Determining, developing and analyzing inclusive set of rules and analytical methods to scale and optimize relationship with customers by analyzing and resolving all the questions which are suitable for business. Implementing or deploying the results to enhance the efficiency of CRM system and processes, improve relationship and interaction with customers and the actual business planning with customers. Combine and integrate the values of customers with strategic business management of organization and value of stakeholders. Analytical CRM is a solid and consistent platform which provides analytical applications to help predict, scale and optimize customer relations. Advantages of implementing and using an analytical CRM are described below. 1. Leads in making more profitable customer base by providing high value services. 2. Helps in retaining profitable customers through sophisticated analysis and making new customers that are clones of best of the customers. 3. Helps in addressing individual customers needs and efficiently improving the relationships with new and existing customers. 4. Improves customer satisfaction and loyalty. The power of CRM provides a lot of managerial opportunities to the organization. It implements the customer information in an intelligent way and creates views on customer values, spending, affinity and segmentation. Analysis is done in every aspect of business as described below: 1. Customer Analytics- This is the base analytic used to analyze customer knowledge base. It provides a better view of customer behavior and by modeling, assessing customer values and assessing customers portfolio or profiles and creates an exact understanding of all the customers. 2. Marketing Analytics- This helps discovering new market opportunities and seeks their potential values. It also helps in managing marketing strategies and scale and plan marketing performance at district, regional and national levels. Marketing analytics also focus on campaign management and planning, product analysis and branding. 3. Sales Analytics- Sales analytic provides essential environment to plan, simulate and predict sales volumes and profits by constantly analyzing organizational sales behavior. It helps in pipelining all the selling opportunities in an efficient way by indulging and improving the sales cycle. 4. Service Analytics- Analytical CRM has major role in enhancing the services which answering all the questions regarding customer satisfaction, quality and cost of products, complaint management etc. It even helps in improving and optimizing the services by sophistically analyzing the service revenue and cost.
5. Channel Analytics- This type of analysis helps to determine the customer behavior on channel preferences, like web channel, personal interaction, telephone channel etc. This information is efficiently integrated in customers knowledge base so that they can be contacted accordingly. The essential results produced by Analytical CRM system could diverse help the organization to tackle ly customers based on values. It also helps in determining which customer is best to invest in, which can be treated at an average level and which should not be invested in.
Collaborative CRM
Collaborative CRM deals with synchronization and integration of customer interaction and channels of communications like phone, email, fax, web etc. with the intent of referencing the customers a consistent and systematic way. The idea is not only enhancing the interactions but also to increase and improve customer retention and liberty. Collaborative CRM entangles various departments of organization like sales, marketing, finance and service and shares the customer information among them to highlight better understanding of customers. For example, the information of preferred products could be shared with marketing department so that analysis can be performed in this aspect to provide preferred products to customers. The information regarding varied cost or price of a particular product in market defined by customers can be delivered to finance department so that strategies could be created to match the product cost with similar products in market and after analysis bring an affordable and efficient product in market. The information regarding a specific service which is not installed in the companys environment and intimated by the customers can be transferred to service department to improve or install that particular service in-house. All this is done efficaciously within the range of channels so that the process automates the needs and minimal time is required for fulfilling these needs. Collaborative CRM can be broadly identified by two aspects: 1. Interaction Management- This management process deals with designing the communication or interaction channel process within an organization which is specific to customer interaction and finally enhancing the extent of communication between both the parties. The communication channel depends on the customers preference on how they require the interaction to be dealt with. Some customers prefer to be contacted via phone and email because of more comfort ability or nonavailability of manual interaction due to no time or unavailability of resources. Some of them prefer to have live online meeting or web meeting to reduce the travel time and lack of time or maybe they prefer more clarified real time environment by sitting at desk and transact. Some of the customers insist for agent conducted services which is often face-to-face interaction as they believe that this way is more efficient and conclusive. Depending on these channels of interaction it is very important for organization to fulfill these needs of customers and gather information from them and implementing it into the CRM before interacting to enhance the interaction power. 2. Channel Management- After analyzing and implementing the interaction medium its important to enhance the power of channels through which the customers are interacted. By using latest technological aspects for improving channel interaction could help to contact customers in an efficient way and gather information from them to help organization to understand the customers. Hence it is important for an organization to clearly arrange the channel responsibilities and duties. Below are advantages of Collaborative CRM: Enables valued customer interaction across the channels. Entangles web or online collaboration to cut down service cost of customers. Integrates customer interaction with call centers to enable multi-channel interaction with customers and helps them make understand the overall process vales. Describes a view of integrated customers details during interaction to server them in a better way. This CRM solution brings customers, process and strategies and data together so that organizations could serve and retain customers more efficiently.
3. Quality Performance Indicator-The Primary quality performance indicator is Order Entry Accuracy (OEA) and First Time Fill Rate (FTFR). OEA is formulated as specific orders produced by customers per total order produced. FTFR is calculated by total products delivered per total products requested. There are many other indicators which help measuring quality performance of customer responses like Invoice Accuracy and Order Status communication accuracy. Invoice accuracy tool keeps a regular check on Invoice automation system and measure the accuracy of them. It is generally formulated as the total invoices with accurate match of items, prices and quantities etc per total invoices received. More the percentage produced by these tools more is the customer response value. It is necessary to measure quality performance so that the customers receive best services and customer satisfaction index always remain on top. 4. Response Cycle Time Indicator- Response cycle time indicator is indicated by Order Processing Time (OPT). This calculates the time taken for the order; from time it was entered till the time it is delivered. One more important indicator called Order Entry Time (OET) is also installed w hich calculates the time taken from intimation of order until the order is captured or entered in the CRM system. This shows the time elapsed in the telephonic conversation or internet. By this the overall entry time taken by the executive to enter the details in the systems can be calculated. This is an important factor and can be used for increasing the productivity and for trying to reduce the time taken for order processing. Lesser the time taken to process the orders and entering the relevant information in the system, more are the chances to consume large number of customers in a given specific interval of time. With the help of above discussed indicators or measurement tools customer response can efficiently be measured. Without having the knowledge of how the processes are performing and understanding which functional areas is lagging behind, improvement and enhancement cannot be done. Hence we can say that measuring customer response is the best strategy to improve it.
3. Writing Communication (Post, Fax, Email) - The writing communication should always be acknowledged immediately and should be replied in detailed format. The advantage of written communication over face to face and telephonic communication is that it is least misinterpreted as it is saved and can be read many times. But the disadvantage is that it lacks in total communication. Hence it is always important to send the written response in details so that any of the relevant point is not omitted in the response.
the three modes. The customers are intelligent enough to come up to the final opinion even in pre-deal stage. Its crucial for suppliers to gain confidence of customers in this stage which will help them to strengthen their relationship in the further two stages. 2. Operational stage- In this stage the customer gives the supplier the project contract and passes it on to the operation people of the organization to analyze further developmental aspects of the projects. He obviously revalidates all the opinions he made in pre-deal stage. It is often that these operational people are among the busiest people of the organization and are more oriented towards their day to day work rather than customers. But the customer still wants them address the following issue while they respond to them: a) Regular progress of the project with all details implications if any. b) Relevant and actual information on status of technology, engineering, manufacturing etc. c) Plan of actual delays in project if any. d) Possibilities of any change in any of the project module or the predicted changes after the first version of the product. e) Testing strategies and quality check constraints. Customer is again responsible for making new set of opinions on the operational stage of the project. This is the stage when the supplier needs to be more cautious as a lot of cost and resources are being used in this stage and they have the opportunity to convert this stage into final deal. The response and interaction with customers in this stage are very rare but it is the duty of the organization to keep the customers well informed by giving proper responses on each operation stage to keep the suppliers in confidence and collect more information if needed. 3. Post-deal Stage- This is the stage when supplier has delivered the final product and the customer is analyzing the product at their end. During this stage there are not much interaction between supplier and customers as long as the product works fine and the customer is satisfied. But in case there are defects in the product or it is not working as expected, then the situation worsens and communication between the two increases. The following are the key responses that the customer must expect during this stage. a) Prompt reply on any abnormal functioning of product. b) Quick attention regarding any faults. c) Priority on repairing these faults. d) Dedicated expert team for quick error handling. e) Managing the product with less capacity and higher efficiency. f) Supply of spares or any asset required at actual price. g) Training from suppliers side to end users. h) Best maintenance and services, post deal. The final opinion of customers about the suppliers is the sum of responses received at each of the above discussed stages.
supplier. For instance if a satisfied and loyal customer has a home insurance policy from an insurance company then there are positive chances that he could also insure his property and car if he is fully satisfied with the services of that insurance company. This will definitely result in growth of business. While acquiring, the nature of response provided to acquisition is the key aspect to create an impressive opinion in customers mindset. Hence, the suppliers should always have prompt, responsive and experienced executives to serve customers. For example, if a customer calls and asks about some critical features of any product and the executive fails to explain it or being non-responsive to most of his questions then the customer could probably divert his way to some other organization for better response which could definitely result in end of the deal and relationship with that customer. Improving customer acquisition is the primary challenge which an organization faces. Hence it is important to identify critical approaches to enhance customer acquisition power. This includes acquiring more number of customers or more number of attractive customers at low cost. One of the best strategies to acquire new customers is performing promotional campaigns. These campaigns should be efficient and well-targeted to customers. Encouragement of customer referrals can also attract new customers. It is always a cost-free advocacy by customers to provide referrals to supplier when they feel satisfied and encouraged and when they have a healthy relationship with customers. These referrals or customers reference of other customers act like a piece of cake for suppliers as there is no cost and struggle involved in this. For enhancing the revenue, the organization should always balance the number of customers acquired with number of customers who divert to different organizations. Failing to which will definite effect the ly economic growth of the organization.
Understanding the above steps, lets take a practical example and compute the acquisition equity stepwise. Step 1: Assume the total number of prospects as 100 in a fixed time period of 1 month. Step 2: After calculating, the marketing cost comes to $ 10, campaign cost $ 5 and servicing cost as $ 5 for whole selling stage. Hence the total cost for contacting one prospect comes out to be $ 10 + $ 5 + $ 5, which is $ 20. Step 3: Now out of 100 customers 10 became actual customers hence the RR (response rate) comes to 0.1 or we can say that the conversion rate is 10%. Step 4: Suppose after the customer purchases any product for the first time, the revenue comes to be $ 500. If the profit margin is 30% then the actual profit gained will be $ 150. This profit turns out to be $ 1500 for 10 customers for the first purchase. Step 5: Through this, acquisition equity can be calculated by subtracting total revenue after customers first purchase i.e. $ 500 with the total marketing, campaigning and servicing cost i.e. $ 20. This will come out to be $ 20 - $ 500 = (-) $ 480. Step 6: Finally for calculating the average acquisition cost for all the customers will be (-) $ 480/10 = (-) $ 48. This is the acquisition cost for 10 customers for that organization. On paper, the above steps and calculations can yet be converted into formulas and equation. These equations will look like, Cost of acquiring a customer Ca= Pc/Pa Where, c = cost of marketing per prospect. a = response rate of customer acquisition. P = number of prospects. Total Customer Investment CI = Pcp Where, Cp = cost of marketing per prospect. P = number of prospects. Profit per customer/Cost of acquiring customer P/C = m/Cp/a = am/cp Where, a = response rate of customer acquisition. Cp = cost of marketing per prospect. m = sales gross margin. Organizations usually get surprise by expensive customer acquisition, hence the comprehensive understanding of knowledge of acquisition cost and calculating cost ratios and business profit would help the organization to enhance and create business strategies in an efficient manner. By benchmarking these calculations the marketing process can be performed smoothly and strategically.
In case the business is done directly the relationship is direct so also the loyalty. But if the selling is through two or more intermediaries then the loyalty has to be measured at different levels. In that case the end customer loyalty is influenced by the loyalty of the intermediate customers. Then the supplier has to focus his loyalty retention plan accordingly and has to judge and analyze the loyalties of the intermediaries. This process depends on what amount of importance he gives to each of the intermediaries and how much to the ultimate customer. But it is certain that well-managed customer retention programs are sure to give the ultimate customer loyalty. True, the customers who are targeted by a retention program demonstrate higher loyalty to a business. Therefore such customer retention programs should include regular communication with customers, and provide them opportunities to remain active and choosing to do business with the supplier. Loyalty is demonstrated by the actions of the customer. But it doesnt mean that the customer satisfaction level can measure his loyalty. Customer loyalty is not customer satisfaction. Customer satisfaction is the basic entry point for a good business to start with. A customer can be very satisfied with the deal and still not be loyal. On the other hand a customer may not express satisfaction but wants to remain loyal to the supplier due to some reasons which keeps him benefited from that supplier. For the same degree of satisfaction, the loyalty level may also be different for different suppliers. On the other hand, loyalty should not be considered as just an attitude. Customer loyalty should have a direct connection to a companys financial results. The supplier should be able to plan a clear and direct economic benefit of some kind, as the result of the strategies and tactics he employs to increase its customers loyalty. Measuring customer loyalty and developing a retention strategy are of great importance to an organizations success.
2. Suppliers credibility: Suppliers credibility helps to elevate customer loyalty. Credibility provides confidence and comfort to the customers regarding the reliability, durability, quality and performance of products and services. In industrial sector, the products provided by suppliers are actually used by customers for production purpose. Hence unavailability, malfunctioning or low performance of these products could highly affect the profitability in business. By nullifying all these factors and providing high valued service and high end products which are available all the time develops a sense of credibility among the customers. In such case customers develop faith and belief in supplier which obviously increases customer loyalty. 3. Customer satisfaction: Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. It can only be attained if the customer has an overall good relationship with the supplier. In todays competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. However, a satisfied customer may be or may not be loyal but an unsatisfied customer potentially seeks other options and may migrate easily. Hence it is important for the supplier to identify dissatisfaction factors and develop corrective measures to cope up with. It is often seen that if these corrective measures are implemented successfully to improve satisfaction then satisfaction level increases to a much higher level as compared to a normal satisfied customer. A satisfied customer mostly tends to be a loyal customer hence customer satisfaction is an important factor that increases customer loyalty.
2. Customer Related: By measuring customer related aspects of customer satisfaction following details can be entailed: a) How many total numbers of customers have defected? b) Specifically which customers have been defected? c) Reason why they have defected and where exactly they have defected? d) Measurement of customer satisfaction always helps a supplier to analyze appropriate reasons of lost of customers and take measures to avoid this. It also provides analyzed information about the business loss in the coming future. This actually helps the supplier to be profitable because cost involved in acquiring a customer is comparatively higher then the cost involved in retaining an existing customer. e) It also helps the supplier to identify the value of their products and services according to the customers perception. If customer is dissatisfied with products and services then there is a need for supplier to check the performance and quality of the product and services so that other customers could not complaint regarding the same. f) It can also analyze the exact need and requirement of customer so that measures are taken accordingly to satisfy each and every customer. 3. Suppliers Related: Following are the suppliers specific information that could be generated while measuring customer satisfaction: a) It helps the supplier to conclude about his own image, strength and weak points. b) It helps the supplier to identify his area of perfection and competency so that they flourish in monopoly of specific products and services. c) It helps in encompassing the organizations position according to the benchmark possessed in the market by competitors. The best way to improve customer satisfaction is to first measure it and then apply methods to enhance it. It helps the supplier to always keep a check on allover business processes by identifying strong and weak aspects and creating strong bond with all their customers to enhance business.
a) Customer Complaints: Customers complaints are the issues and problems reported by the customer to supplier with regards to any specific product or related service. These complaints can be classified under different segments according to the severity and department. If the complaints under a particular segment go high in a specific period of time then the performance of the organization is degrading in that specific area or segment. But if the complaints diminish in a specific period of time then that means the organization is performing well and customer satisfaction level is also higher. b) Customer Loyalty: It is necessarily required for an organization to interact and communicate with customers on a regular basis to increase customer loyalty. In these interactions and communications it is required to learn and determine all individual customer needs and respond accordingly. A customer is said to be loyal if he revisits supplier on regular basis for purchases. These loyal customers are the satisfied ones and hence they are bounded with a relationship with the supplier. Hence by obtaining the customer loyalty index, suppliers can indirectly measure customer satisfaction.
ambassadors for the supplier to advocate other prospects to become potential customers. Hence it is essential for the organization to nurture their customers to create a strong bonding with them in short run and then focusing on higher profits in the long run over the whole life cycle of customers. 3. Pricing best customers: Retention rate also depends on how the pricing of products are managed among the best valued customers. All the customers are always cost sensitive and concentrate basically to buy products on cheap rates. However, cost sensitivity of a customer substantially depends on condition of the market. For example if a product becomes extraordinarily famous and demanding in market and every customer is tending towards capturing this product then it becomes necessary to focus on technological aspects rather than focusing on the cost. If they do so then the cost sensitivity of these customers is least. Similarly if a product becomes common in market due to emerging competitors coming up with similar but more prominent products, then in this competition the value of the product decreases and the companies become rarely bothered for them. In this scenario the customers have the right to become highly cost sensitive as they know that they can negotiate with the suppliers to a greater extent. 4. Retention and acquisition link: Retention and acquisition are interdependent approaches. Take an example of a Gym that provides a very low introductory offer to all the customers to attract them. Many customers are very price sensitive and have the tendency to defect if the Gym increases future membership price. If the Gym also provides the renewal cost to be as low as introductory price then they have a better chance to retain these price sensitive customers. But by doing so they are in risk of loosing high valued customers who prefer best services and less surrounding crowd. In this case the Gym must implement the strategy to continue taking high membership renewal cost. This process may lead to most of the low value customers to defect but the total profit in retaining the high value customers will be always more. This also helps to uplift the image and status of the Gym by providing best services to its customers which results in acquiring and retaining more high valued customers and generate good profit.
Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions. Success totally depends on understanding and interpreting these queries and then working out to provide the best solution. During this situation if the supplier wins to satisfy the customer by properly answering to his queries, he succeeds in explicating a professional and emotional relationship with him. Hence customer service is one of the most influential determinants of customer retention. 7. Exit barrier: Organizations which are successful in creating an exit barrier can obviously retain customers. For example, by providing rewards and concessions to continuously buying customers or by designing and customizing the products according to customer needs could create a barrier against the customer to switch to other options.