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Customer Relationship
Management
Sonali Banerjee
 Amity Business
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The Criticality of Customer Relationships
 Non – traditional competition

 Market maturity, and

 Misalignment between revenue and

profits
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Why Businesses Should School CRM

Adopt
1.) Rising Customer Expectations

 Increasing affluence in the emerging

economics.
 Greater awareness due to explosive

media growth.
 Customer diversity.
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2.) Affordable
Technology Advances
 Production

 Distribution

 Facilitation

 Consumption
 Technology Advances
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Production Distribution

Affordable
Technology
Advances

Consumption Facilitation
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Implementing CRM
Many companies are sponsoring a
number of CRM initiatives – often with
little coordination or clarity of purpose.
For instance, an astonishing 63% did
not know how much their CRM efforts
increased or decreased their
profitability.
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Implementing CRM

In the context of banking:

CRM cannot be simply grafted onto the multi
– product, multi – organisation of most
banks. The huge amount of information
available to these banks, coupled with the
wide array of products and services they sell,
can make implementing CRM a complicated
and time – consuming task entailing broad
institutional change.
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Implementing CRM
3 elements that a firm has to master for competitive
advantage:

… First a relationship orientation must pervade the

mindset, values, and norms of the organisation.

…Second, the firm must keep deepening its knowledge

of these customers and putting it to work throughout
the organisation.

…Third, the key processes must be internally and

externally aligned with the corresponding processes
of the firm’s customers
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Implementing CRM

Shainesh & Sheth ( the authors)

believe that :
 A process oriented strategic approach
driven by the top management to link
the operational, informational and the
organisational components of CRM will
be crucial for the success of CRM
initiatives.
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Implementing CRM

Goff et al. (1998) reported:

Companies that have taken a

comprehensive view are enjoying
improved results; those that have not
are struggling with technology for
technology’s sake.
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Evolution of CRM
(a) Rapid advances in technology.

(b) Intensive competition in most

markets.

(c) Growing importance of the service sector.

(d) Adoption of total quality management

(TQM) programs.
The Six Markets Framework
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Internal
Markets

Supplier Referral
Markets Customer Markets
Customer Markets Markets

Recruitment Influence
Markets Markets
 Defining CRM Amity Business
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1) Jackson (1985) Marketing oriented toward

strong, lasting relationships with individual
accounts.
2) Parvatiyar and Sheth (2001) defined
CRM as:
Customer relationship management is a
comprehensive strategy and process of
acquiring, retaining and partnering with
selective customers to create superior value
for the company and the customer.
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Customisation of
Marketing Mix
Learning About Customers 1. Product / Service
1. Knowledge Acquisition 2. Communications
2. Customer Differentiation 3. Channels
4. Price
 BONDING FOR CUSTOMER
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RELATIONSHIP
School

Berry and Parasuraman (1991) have

identified four levels of bonds.

Level 1: Financial Bonds

Level 2: Social Bonds
Level 3: Customisation Bonds
Level 4: Structural Bonds
 CRM IN SERVICES
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Service Quality Themes in CRM

Building relationships with customers takes on different

dimension due to the very nature of services :

Listed below are the Important characteristics of Services:

1. Intangibility
2. Simultaneity of Production and Consumption
3. Perish ability
4. Heterogeneity
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Berry (1997) has identified three situations in

which relationship is most applicable to a service
firm.These are:
1. There is an ongoing or a periodic desire.
eg: a) telephonic service – ongoing desire.
b) hospital service – periodic desire.
2. The customer decides which service provider he/she
wants
eg: a) which restaurant (choice)
b) taking the first taxi/auto outside a
airport/station (no choice)
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3. There are alt. service suppliers and

switching of customers from one
supplier to another is common
eg: a) fly by an airline of his/her choice
(no switching costs)
b) as opposed to buying the
electricity (monopoly)
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Parasuram, Berry and Zeithaml (1985)

developed a model:

Perceived service quality is defined as

‘the degree and direction of
discrepancy between the consumer’s
perceptions and expectations’.
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Parasuraman, et al. (1988), identified the

following five dimensions that determine
service quality:

1. Reliability
2. Assurance
3. Tangibles
4. Empathy
5. Responsiveness
The Impact of Service QualityAmity
on Business
Loyalty
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Service
Quality

Satisfaction Loyalty

Product

Price Relatively Easy for

Competitors to Copy
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The Cost of Losing a Customer

There are many ways in which loss customer cost the

firm.
1. A lost customer reduces cash flows for the firm in
the future.
2. Second, if a firm wants to maintain the same
volume of business, it has to attract new
customers.
3. Servicing customers over a period of time becomes
more cost – effective for service firms as they
discover new traits of the customer and his likes
and dislikes.
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4. Firms with long – term customers, in

whom they have developed a higher
level of loyalty, can charge more for
their products and services.

5. Finally, highly satisfied long – term

customers are likely to refer new
customers to the firm.