Customer Relationship

Management & the

Marketing Research Process

UNIT : 3

As few as 10 percent of your

customers contribute 90 percent to
the companys profits. The problem
is finding out who they are!!
David Ogilvy

Continental Airlines Case Study

Continental Airlines prepares in-flight reports giving more

detailed information about the passengers. For example, in
addition to indicating passengers that have ordered special
meals, the expanded reports flag the airlines high-value
customers and details such as whether theyve had their
luggage lost or experienced a delayed flight in the recent
past. The flight attendants then apologize for the same.
Such exercise increases customer loyalty and in turn drives
revenue. The carrier built a real time data warehouse which
enabled the carrier realize that customers to which a letter of
apology or some compensation was given, forgot their past
bad experiences.
The data warehouse has solved the problem of
inconvenience caused when the flight is delayed or
canceled. The system automates the rebooking process

Value of Customer Relationship Management

Customer Relationship Management (CRM) is a

business strategy that aims to understand, anticipate, and
manage the needs of an organisations current and
potential customers.

The outcomes of CRM are high customer knowledge,

increased revenues, service quality & maximum customer
satisfaction.

Companies which lack in customer driven information

focus, loose service quality, experience high operating
costs and reduced levels of customer retention.

Most companies fail to recognize that:

1. There exist a strong correaltion between customer
satisfaction & customer retention. Customer who rate
services high are unlikely to swith to another
product/service provider.
2. Information through complaint behaviour is a key
ingredient for CRM. Lack of opportunity to complain
couuld be frustrating to the customer.
3. The focus of making & selling is outdated in present
competitive environment. Value addition to product is key
to the profitabilty of customers.

Essentials of Customer Relationship Management

Customer Relationship Management is also refered as

Customer value management, Customer-centricity, or
Customer-entric management.

CRM is management of customer relationships based on

the integration of customer information throughout the
business enterprise (all facets of business, including
suppliers & retailers) to achieve maximum customer
satisfaction & retention.

Changes in Business Environment (Example: Internet &

Electronic commerce) have made enterprises realise that
treating existing customers is best source of profitability
& sustained growth.

The concept of selling products or services on transaction

basis assuming constant customer acquistion mode has
faded.

Todays business enterprises are thriving to establish

dialogue with customers, understanding & anticipating
customer change, and attempting to maximising the
lifetime value of the customer.

CRM focuses on one customer at a time, but for millions

of customers.

Customer Interaction is establishing relationship with

customer. Relation here refers as perception the customer
has of the enterprise

Perceptions are end result of interactions between

customer & enterprise, directly or indirectly.

These can be either internal (distributors, sales, customer

service) using different communication channels (face-toface, telephone, e-mail, websites) or external (via
advertising campaigns, direct mail, surveys).

Such interactions when stored are termed as Customer

Knowledge. Customer knowledge are then used to create
customer profiles which can be used to segment customers for
appropriate products & services, build stronger relationships.

Exhibit 4.1: Flow Model of Customer Relationship Management Process

IDENTIFY Customer
relationships in the
Enterprise
Leverage &
DISSEMINATE Customer
information through the
enterprise

UNDERSTAND
Interactions with Current
Customer base

ANALYZE data to identify

BEST customers

Use TECHNOLOGY to
store & Integrate customer
data

ACQUIRE & capture

Customer DATA based
interactions

Marketing Research & Customer Relationship Management

The primary function of Marketing Research(MR) in

CRM process is to collect, store, & analyze customer
interaction information.

Here the role of MR is transformed from a mere practice

of traditional data gathering to strategic and real time
information gathering to achieve competitive
intelligence. Such concept is termed as Market
Intelligence.

An enterprise cannot meet its customers needs & wants

& offer value, unless it understands clearly the evolution
& change of the customer.

Collecting & capturing the information involves the

development of Market Intelligence culture. This culture
ensures that collected data are integrated into all facets of
the enterprise.

Such culture becomes essential as most customer data in

an enterprise exist in silos. Data in Silos are exclusive to
one functional area of the enterprise & not shared with
other areas of the enterprise.
Example: Late payment notices from accounting are not
shared with customer service departments attempting to
introduce new product or program.

Shared data facilitates improved customer

understanding & such level of knowledge & integration
comes only through Market Intelligence

Transforming Marketing Research into Market Intelligence

Transforming into Market Intelligence enterprise is essentail because
in such enterprises information is shared for the purpose of being
connected, responsive, & proactive to customers.
Market Intelligence model provides a competitive advantage by using
customer information at granular data level.

Granular data are detailed, highly personalised & specifically

structured around an individual customer.

On the basis of granular customer information, market intelligence

enterprises anticipate the desires of the customer & refine their
offerings according to this anticipation. Such approach is commonly
refered to as customer-centric approach.
Market Intelligence enterprise four unique characteristics which are

1. Strategic Use of Customer Information

An market intelligence driven enterprise strategically uses

customer information to address the following question & sort
customers into profitable & unprofitable segments.
What does my customer value?
What is the value of my customer?

Information from internal & external sources sholud be organised

& categorised into the firms data warehouse.

Information souces: transaction (purchase frequency, credit

information), sales people (competitive information), call centers,
sales promotion (purchase habits), survey data (customer
information), in-store interations, the internet, demographic
information, service bureaus, database marketing companies, &
even motor vehicle registration.

2. Information Based on a Transactional Focus

In every contact with customers an opportunity exists
to capture customer information, invest in the
customer relationship, and build loyalty.

Real time communication also provides information

beyond the transaction. (Buying Pepsi when Coke is
not available)

The enterprise then shares such information

throughout product planning and production to
respond to the need for a product or service.

Example: A bank might learn that a particular customer

generally phones the banks call center on Sunday
evenings. When the banks wants to communicate with
that customer, that would be the right time to interact.

3. Enterprisewide Approach to the Use of Information

In CRM, it is critical that information does not remain in the

hands of few departments. Successful CRM enterprises use
information across all business units to manage supply
chain, create customised products & pricing structues,
acquire new customers, and improve service and quality.

All individuals in the enterprise having direct or indirect

contact with the customer must be exposed to identical level
of customer information. (across various depatment).

Level of shared information must even extent beyond the

firm to include all facets of the enterprise Suppliers,
independent contractors, faciliting agencies and retailers.

4. Technology Support of the CRM Structure

Technology support makes it possible to develop a

strategic information-reach CRM infrastructure.

Technology support turns customer data into customer

knowledge enabling profitability through precise
targeting of market segments.

All such information is integrated and stored in a

centralised database called a data warehouse. The data
are then analysed through techniques of data mining.

Data Collection in a CRM Environment

Assessing Customer Data over the Internet
Signing onto the internet, visiting virtual storefronts, sending
& receiving e-mail, or chatting in newsgroups- all such
activities are traced by various businesses. Such data search
are classified as passive, active, or directive.
1. Passive Data
Refers to automatic data given to a business once the
consumer visits a particular website. The data obtained is
the Internet address, and it can be in two forms;

The Internet Protocol (IP) address disclosing the numeric

location of a computer.
The Domain Name (DN). Ex: Micheal@rosarycollege.edu

 Passively gathered information can be used to categorise

individuals into larger groups or segments.
Businesses can narrow its customer demographic base by
checking for commonalities in the domain location and then
targeting advertising or promotional material to such domain.

2. Activa Data
Are data acquired by a business when customers interact with
the businesss Website.
Example: Information generated through cookies or online
application forms filled customers
Using such technology, a business can track a customers progress
through a website page by page.
Everytime the customer accesses the businesss website, the
business will have customers information and will can track the
frequency of visits.

 Active data increase the level of customer knowledge for

the enterprise. Example: E-mail adresses, other
volunteered information, surfing patterns tracked through
cookies.
Such information can be used to predict tastes, desires,
preferences, and buying patterns of the customer.
Example: items kept on shopping cart on the website are
saved in the customer browser cookie file so that all items
can be paid for at the end of shopping experience. If
customer makes the purchase, e-mail addresses, credit card
information, geographical location of the customer are also
retained in the file. The firm can then plan its marketing
efforts accordingly.

3. Directed Data
Directed data are the most comprehensive data available
on customers. Such data are not necessarily new but can
be considered as newly assessed information on
customers.
Example: using just the customers last name, the internet
can be used to find a persons full address, get a map of the
exact street location, a zip code, motor vehicle registration,
even amount of donations made by an individual.
Example: CIBIL.

This type of data yields all possible information about a

customer. Example: tracking a persons visits on the web
and buying habits. Sometimes could even generated
customers complete profile.