Customer Relationship Management

The relationships between the Customer and Supplier are present at

various levels;
Partner the active role both the customer and supplier play to reach this level

Supporter-Ambassador the degree of relationship going to ambassador

Customer-Client If the transactions continue to more than once

Prospect -Customer If transaction occurs

However reciprocity is the basis of the relationship

Customer Relationship Management

What is relationship?
a. It is commitment an enduring desire to maintain relationship.
Three forms of commitment are

Personal commitment

Moral commitment feel obliged

Structural commitment the set up of the organisation

b. It is trust a basic condition to develop relationship

It is a next higher level of commitment

Associated with honesty, fairness, responsibility, helpfulness

and involvement

It leads to goodwill and removing a feeling of doubt and

insecurity

The big question is, can these two be forced on somebody?

Customer Relationship Management

These must grow, and that is the responsibility of the people dealing
with (seller OR buyer).

They must study as to how these can be developed

Both parties, need to develop empathy for each other

Must have a positive attitude towards each other

Describe common values and norms (by experienced

people) among other employees so that they understand
(may training, posters, some printed card or oath by the
employees and enforce)

Customer Relationship Management

THE FIVE PHASES IN RELATIONSHIP
1. The first phase is Become aware of each other

The starting point of contact where both parties contact or come

face to face and start the process
In this phase the seller looks for the customers. It could be a
market survey, the existing database or database taken from the
agencies

2. Exploration starts as soon as they contact and realise the switching

costs are low

They realise that they have something common goal to achieve

The buyer realises that the seller is offering a product that he can
buy

Empathy also plays an important role in this phase

Basic evaluations and negotiations also take place in this phase

In this phase, the seller tries to gather information regarding the
wishes and expectations of the customers so that offering could be
tailor-made to the requirements

Customer Relationship Management

3. Growth phase growing relationships due to satisfaction occurs in
this phase

Dialogue continues with negotiations

Norms and expectations are more specified than before

Evaluations are more in depth and more risks are taken

Dependency increases and more resources are involved

The seller in this phase develops the relationship by delivering the
services and cross sell or up sell

4. Commitment or Saturation is the fourth phase where the

relationship has reached maximum level of;

Commitment, Mutual dependency, Trust and Respect

More open discussions are held in this phase, which may help the
seller to develop and diversify into more new lines of business
The relationship goes beyond routine. It has to be taken as challenge
to enhance since in this stage, competition is strong and more
alternative products or services are available to enhance the
relationship and retaining the customers.

Customer Relationship Management

5. The final phase is Decline when the continuity of relationship is the issue
and number of transactions decline. The causes being;

Difference in expectations

Differences in characteristics of the partners

External influences

In this phase the seller needs to analyse the customers and a distinction be
made between the customers worth retaining. If so what could be the reasons
that the company does not wish to retain or wants customers to leave

Customer Relationship Management

NATURE OF CRM STRATEGY

The companies would have either of the three value disciplines;
a. Operational Excellence the companies try to excel in higher
productivity at lowest cost, but not on development of individual customer
knowledge and implementing the CRM systems as such
b. Product Leadership these companies strive hard to get product
leadership by innovation and improvement. It may sometimes be risky
since the products may not be acceptable to customers
c. Customer Intimacy the companies build relationship with the
customers. In this strategy the customer comes first and products are
designed and developed as per the requirement of the customer only
Of the above, the first two are considered offensive strategies, the basic
criteria is market share, while the last one is defensive which considers
sales per customer or customer satisfaction

Customer Relationship Management

CONTEXT OF CRM STRATEGY

Every strategy considered or applied by a company, is always in some context.
The most relevant shall be market and external environment.
a. Internal CRM does not mean involvement of Marketing and IT only. All
relevant departments need to be involved.
If the company faces problems of quality, distribution or inability to meet
customers requirements and needs, resulting in decreasing orders or
switching loyalty to competitors implementation of CRM may not work
b. External the CRM strategy must be with external environment under
three heads;
i. Customers
ii. Competition
iii. Distribution

Customer Relationship Management

A relationship oriented organisation (ROO)needs to be created
The starting point is MISSION, ensuring commitment between the customer
and supplier, reflecting the intentions of both the parties.
1. The first is concept of trust. Trust that needs to be created between the
two parties involved and conviction that the other party will fulfill its
promises
2. The second is Customer Satisfaction, when expectations are met or
exceeded
3. The third, commitment is the attractiveness of the relationship
4. The fourth is the switching cost, that change from existing
customer/supplier to another. The type of problems and the cost involved
in the switchover
The Ashridge Mission Model, the characteristics of ROO Mission should
express the following;
1. The Objective to be in existence primarily to serve the customers
2. The Strategy the company to work for increasing the relationship as
the primary focus

Customer Relationship Management

3. The Code of conduct to be followed by;
a. Feel empathy for each other
b. Create trust
c. Open and sincere
d. Lending all for relationship and increasing commitment
4. The values involved in the relationship
CULTURE
Create a corporate culture unless a corporate culture is created, the way
people think and act, CRM can not be an effective tool. For any organisation it
is therefore necessary to;
a. Make people understand common norms and values, and translate into
actions
b. Ask senior people who can set examples so that others follow and these
people should be spread all over the organisation
c. Arrange seminars and meeting and repeat the values again and again

Customer Relationship Management

A category customers, only 5% of
numbers but business 65%
B category customers, only 15%
numbers give 20% business

C category customers, 80% but

business is 15%

STRUCTURE
The customer pyramid shows that the customers may be divided into different
groups. The customers who give maximum business will be the least
numbers, while a large number of customers will give you the least of
business.
Study and organise so that more importance is given to customers in A
category and may be you depute a personnel specifically for these customers,
may be for each individual customers a separate person

Customer Relationship Management

PEOPLE
Whatever IT systems you may employ, but unless competent people with high
skills are there, CRM does not give results.
The people may be employees of call centre, a sales representative, a service
staff or in departments like HR and Administration etc., they must be very
competent with important qualities such as;

Capacity for empathy they must be able to visualise the empathy of the
customers. The organisations may arrange training programmes to
increase the sensitivity of the people so that they understand the
customers better

Ability to create a positive atmosphere showing openness, transparency

and sincerity

Maintaining an un-conditional positive attitude

Customer Relationship Management

COMMUNICATION & INFORMATION
A very important factor. The customers must be fed with all the information that
they desire or whatever are necessary and must be communicated. The
communication also must be very regular and not just when required. This
helps in maintaining close relationship
Not just keeping the data (you may have all the data but are using only a
limited of those available), but useful data.
The companies must therefore ensure that they invest time and energy in
collection of relevant and useful data

SYSTEMS
The type of systems the organisations have for evaluations of people and the
values given, e.g. you may be evaluating the people based on the volumes
only and the values like image, support of suppliers and buyers not considered
The organisations must try to have such systems which have an overall
balance of the values in their systems