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Today, companies face their toughest competition ever. Businesses are moving from a Produce-and Sale philosophy to a holistic marketing philosophy Cornerstrone of a well conceived marketing orientation is strong customer relationship. Marketers must connect with customers informing, engaging and even energising them in the process. Make your customer centre of your culture - John Chambers, CEO Cisco Systems
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TOP
Middle Management
Management
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The only value a company will ever create is the value that comes from customers which are there now and those which will be there in future. Businesses succeed by getting, keeping and growing customers. Customers are the only reason you build factories, hire employees, schedule meetings, lay fiber optic cables or engage in any other business activity. Without customers there exists no business.
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Customer perceived value is the difference between the customers evaluation of all the benefits and all the costs of an offering Customers tend to be value maximisers, They will estimate which offer will deliver the most perceived value and act on it
Personal Benefit
Image Benefit
Energy Cost
Psychological Cost
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Buyers Satisfaction
Buyers satisfaction is a function of the products perceived performance and the buyers expectations.
High customer satisfaction leads to customer loyalty, for many companies today Total Customer Satisfaction is both a goal, as well as, a marketing tool
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Companies seeking to expand their profits and sales must spend considerable time and resources searching for new customers. They develop adds and place them in media that will reach new prospects, send direct mails and make phone calls to possible prospects, send their sales persons to particiape in trade shows and so on. It is not enough however to attract new customers, the company must keep them and increase their business. Too many companies suffer from high customer churn or defection.
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Retention Dynamics
Potentials
Disqualified Prospects
Marketing efforts can concentrate on converting prospects into first time customers and then into repeat customers and then into clients (people whom very special treatment is given). The next challenge is to turn clients into members by starting a membership program that offers special benefits. And then converting members into advocates, who enthusiastically recommend the company and its products and services to others. The ultimate challenge is to turn advocates into partners.
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Or Ex-Customers
Inactive
Members
Advocates
Partners
Satisfied customer base constitute the companies customer relationship capital. Like other assets of company such as Plant and Machinery, Brand Name, Human Capital, The customer base is also considered as an assets now a days.
It is an enterprise wide effort to acquire and ratain profitable customers. CRM focuses on building long term and sustainable customer relationship that adds value for both the seller and customer. The enterprise, with a close customer selection, one to one marketing route and insightful customer database tool, harnesses the concept of customer lifetime value (CLV) and incorporates a technology solution to serve customer effectively and profitably.
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CRM- Customer Relationship Management (CRM) is defined as the aligning of business strategy with corporate culture of the organization, along with customer information and a supporting information technology of the customer interactions that promote a mutually beneficial relationship between customer and enterprise.
CRM is a business philosophy based on upon individual customers and customised products and services supported by open lines of communication and feedback from the participating firms that mutually benefit both buying and selling organisations.
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The buying and selling firms enter into a learning relationship, with the customer being willing to collaborate with the seller and grow as a loyal customer. In return, the seller works to maximize the value of the relationship for the customers benefit. In short, CRM is a business strategy to select and manage customers to optimise long term value.
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It typically costs 5-10 times as much to acquire a new customer as it does to retain an existing one. Some companies can boost profits by almost 100% by retaining just 5% more of their customers. Harvard Business Review (Reicheld & Sasser) A recent McKinsey study showed that the average new customer spends $24.50 at a given web site in the first 3 months as a shopper. The average repeat customer spends $52.50 every 3 months. Most companies lose 50% of their customers in 5 years (Harvard University) On average only 15% of a sites customers consider themselves loyal to it. The loyalty rating among people who had experienced a problem was only 6%. Customers who had not experienced problems indicated a customer loyalty rating of 19%. The loyalty rating among customers who had experienced problems but were satisfied with the way they were handled: 21%. (Digital Idea) 70% of repeat purchases are made out of indifference to the seller, NOT loyalty. The web customer is only 1 click away from your competition.
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The ideas underlying CRM such as customer orientation, profit directed marketing, retaining customers over lifetime and relationship building were known all along to maketing practitioners. However as a solution to current marketing scenario CRM is certainly a new tool.
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Is CRM New?
Argument for No! Simply an extension of relationship marketing Builds on customer service and satisfaction concepts Just the latest buzzword for creating customer orientation Bottom-line is still the same Argument for Yes! A shift in corporate philosophy concerning the approach to value delivery Customer-centric approach to value chain New and technologyenhanced processes Focus is not just on bottom-line, but on topline Goal is to create satisfying experiences across all customer contact points 15
Features of CRM
One to one relationship between customer and seller. Treat different customers differently. Each customers needs differ and each customers value to company is different.
Many businesses are focusing efforts on CRM in traditional channels. Most of these efforts are independent and function wise which later on require expensive integration. Successful deployment of CRM across the enterprise is only way to bring consistency in customer experience in dealing with the enterprise.
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Customer Service
Direct Mail
Web
Branches
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Independently developed CR capabilities within various parts of the enterprise usually begin based on function specific short term needs. Marketing implements CRM with variety of products, marketing campaigns, and performance database marketing, lead management and sales force automation Supply Chain works out mass customisation to provide up-to-date minute information about goods in transit to customers Field Service representatives and contact centres deploy sophisticated telephony and information systems to provide ongoing customer service and cross selling.
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These separate capabilities do provide a means to support function specific and channel specific CRM strategies. This helps in business culture shifting from product focus to customer focus.
Sales & Marketing can focus on retention and increase of share of customers instead of acquisition and market share. Service dept can identify and take advantage of cross sell and up sell opportunities.
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Operational
Analytical
Collaborative
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Analytical CRM
Customer Segmentation Trend Analysis
Operational CRM
Campaign Management Tele-Marketing/Tele-Sales Activity and Time Management Quotation and Order Processing Delivery and Order Fulfillment Customer Service and Support Remote Access Enterprise Portals Customer Access Supplier Access Personalization
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Collaborative CRM
Operational CRM
Operational CRM provides support to "front office" business processes, including sales, marketing and service. Each interaction with a customer is generally added to a customer's contact history, and staff can retrieve information on customers from the database as necessary. Examples: Campaign management, e-marketing, account and contact management, telemarketing, teleselling, e-selling, field sales
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Analytic CRM
Applications that analyze customer data generated by operational CRM applications (and many other sources) to provide information about customers that can be used to build profitable relationships
Examples: Develop customer profiles; analyze customer or product profitability; identify trends in sales length cycle; analyze leads generated and conversion rates develop predictive models to try and anticipate customer behavior
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Collaborative CRM
Collaborative CRM is used where customers self serve. This can include a variety of channels, such as internet, email, automated phone/ interactive voice response (IVR).
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E-Commerce
Campaign Management
Managing customer touches Managing marketing campaigns Monitoring marketing campaign performance Managing inventory levels Driving mass customization Managing cross-sell and up-sell opportunities Customizing marketing channels, such as the Web Personalizing communications Driving contact centre scripts Capturing key performance metrics products and services
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Capture Customer
Store Data, Mine Capture Customer and Make Data and Measure Information Results Accessible
Capture Build and Customer Manage Data and Measure Customer Value Results
The building blocks of CRM allow an organization to manage this cycle and use the knowledge on customers to enhance the Life Time value of the customer portfolio. No organization has perfect information on its customers. Knowledge of customers is continuously enhanced through the CRM dynamic.
CRM Strategies
Customer Acquisition
Customer Retention
Gain the greatest number of new Best customers as early in their lifespan as possible. Retain and expand your business and relationships with your customers through upselling, cross-selling and servicing. Offer programs to ensure that your customers happily buy what you offer only from you. Enable loyal customers to become a volunteer sales force. Reduce costs related to marketing, sales, customer service and support.
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Customer Loyalty
Profit
Enabling profitable marketing in a competitive and customer dectated environment is the mission of CRM The focus is
A. To retain profitable customers lifelong. B. Enlarge the share of sales to them.
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Acquisition
Innovation Convenience
The value proposition to the customer is the offer of a superior product backed by excellent service
Enhancement
Reduced cost Customer Service
Retention
Listening New Products
Retention focuses on service adaptability, i.e. it delivers not what the market wants, but what the customer wants.
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E-CRM
CRM has been practiced manually by corporations for generations. However since the mid 1990s various types of Information Technologies have enhanced CRM. E- CRM solutions are especially valuable to companies that face the following circumstances Business is driven by mission critical customer service requirements Current costs for CRM run high Large volumes of information is distributed A complete customer care solution is needed
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Scope of E-CRM
Three levels are identified as Foundational Service Minimum necessary services such as Website responsiveness, site effectiveness, order fulfilment etc. 2. Customer Centered Services -These include order tracking, product configuration and customization, security & Trust. Value Added Services - extra services such as online auctions, online training and education etc.
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3.
Enterprise Resource planning (ERP) Systems Sales force automation Integrated point-of-sale systems Database management platforms Advances in contact management technology & infrastructure Internet providing a completely new way to interact with customers.
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Information moves about freely across the organization. The customer information would flow like water within, around and through these functions and channels for mutually beneficial relationship with the customer
There is an integration of marketing, sales and service across the business partnerships, the direct sales force, the tele-channel and e-channel.
Every one interacting with customer will have access to the latest information on the customers profile, behavior and expressed needs. Customers can be sent latest promotions and offers based on their interaction on the website Products are customised to meet specific customer needs Customer service is fully done resulting in increased level of customer satisfaction and loyalty With enterprise wide view of each customer the value of each relationship is measurable and each relationship is managed based on this value.
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E- CRM Solutions
E-CRM solutions can be deployed and managed to provide increased revenues and decreased costs for companies while improving customer service.
Customer information environment - In the first stage, building up of a customer information environment and acting on it forms the starting point. It consists of Metrics programs, Customer information repository, and monitoring customer behaviors. Customer Value Orientation - In the second stage, operational effectiveness is the focus. Customers want value for their money. They believe that they have got value when the perceived benefits they receive from something exceeds the cost of owning it.
Customer Loyalty - In the third stage, focus is on the integration of internal process of the organization with the customer in creating a community.
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E-CRM Toolkit
E-mail management Storefront Services
Customer Management
Customer
Content Assisted selling
E-marketing
A system for customer relationship management to cover wide diversity of channels Content a content as required by customer should be delivered online and managed properly on IT platform Storefront and merchandising services should propel the customers to the cash point and convert visitor into buyer. E-mail Management How effective e-mails are focused to promote offers to customer which cannot be refused. And how easily this leads customer to actual buying site in a seamless manner Customer management Is customer data well managed across the company. E-marketing How well e-marketing and online selling operation are combined. Assisted Selling How assisted selling is incorporated to enhance business 41
E-CRM solutions
E-CRM solutions can be grouped into two categories- Web-based solutions and Webextended solutions. The Web-based CRM solutions are designed from the bottom up, exclusively for the Internet. These are very innovative products, initially focussed on the sales (e-commerce) function. More marketing and service capabilities will be soon added. Web-extended CRM solutions are established (primarily client/server-based) CRM suites, originally designed for enterprise users with extensions, to include web-interface functions.
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Customer Lifetime Value means the economic value of customer relations during the whole period of relation between customer and company.
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Period under consideration of analysis (e.g. month, quarter) Discount rate of a company (cost of capital) Planning horizon (how many periods) Frequency of buying/turnover Average turnover per buying Estimated customer retention
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Number of Relationships
Current
Current Customer Value
Current
Relationship Duration
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CRM Failures
Difficulty in measuring and valuing intangible benefits. (Most CRM benefits are intangible) Failure to identify and focus on specific business problems Lack of active senior management sponsorship Poor user acceptance and usability problems Trying to automate poorly defined process
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Thank You !
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