Customer Relationship Management (CRM) is a company-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by focusing on highly defined and precise customer groups.

2. What is CRM????
• CRM is a company-wide business strategy designed to
optimize profitability, revenue, and customer satisfaction
by focusing on highly defined and precise customer group
s
• By organising -
– the company around customer segments.
– Establishing and tracking customer behaviour and
– Linking all processes of the company from its customers through
its suppliers

3. A Simple Flow Model of CRM system

4. • CRM is often described as a closed loop system that
builds relationships with customers.
• It is continuous and circular system with no predefined
starting or end point

5. Identify Customer Relationship
• To initiate CRM cycle a company must identify custom
er relationship with the organisation. This simply entail
learning-
– Who the customers are?
– Where they are located?
– Which product or services they are using?
• Eg. Recommended plans of Data packs
• Pre approved loans based on CIBIL

6. How to Identify Customer R’ships with org?
• Customer-centric approach
• It is a philosophy similar to marketing concept.
• The company customizes its products and service
offerings based on data generated through interactions
between the customer and the company.
• Customer centric companies continually learn ways to
enhance their product and service offerings
• Eg. Taj Air Caterers – Singapore airlines
•

7. Examples
• Nissan introduced options for the buyers to select
choose engine model, interior and exterior vehicle
color, etc.
• Nutella also added customization to their marketing
strategy, allowing its customers to add their name to
the jar.

9. • Learning
• Learning in CRM involves collecting customer
information through comments and feedback on
product and service performance.
• Each unit of business typically has its own way of
recording of learning. It makes difficult to pull all of the
customer information togather in one place using com
mon format.
• To overcome this problem, companies using CRM rely
on knowledge management.

10. • Knowledge management
• It is a process by which customer information is central
ised and shared in order to enhance the relationship b
etween customers and the organisation.
• The information collected can be in form of-
– Experential observation (Eg. Mystery shopper)
– Comments
– Customer actions (Eg. Reordering)
– Qualitative facts about customer (Eg. Bargaining pa
ttern)

11. • Empowerment
• It involves delegating authority to solve customer’s
problrms.
• In other words its is a latitude organisations give to the
ir representatives to negotiate mutually satisfying com
mitments with customers.

12. • Interaction
• Interaction occurs when a customer and a company
representative exchange information and develop
learning relationships.
• With CRM, the customer defines the terms of
interaction, often by stating his or her preferences.
• The organisation responds by designing products and
services around customers’ desired experiences.
• Ex. Starbucks – Suggestions from customers on
website – noisy blenders

13. Understand the interactions of the current
Customer Base
• Only through effective interactions can organisations
learn about the –
– expectations of their customers,
– generate and manage knowledge about them,
– negotiate mutually satisfying commitments, and
– build longterm relationships

14. • For the org. following a customer centric approach ,
an interaction can occur through formal or direct
communication channel such as a phone, the Internet,
or a sales person.
• The interaction can happen through various touch
points.
• In CRM system, touch points are all areas of business
where customers have contact with the company and
data might be gathered.

15. • Touch points might include
– A customer registering for a particular service
– A customer communicating with sales representative
– Customer talking with delivery personnel or product i
nstallers
• Data gathered at touch points is interpreted which
provide valuable inputs to the company.
• Web-based interaction is becoming increasingly popular
touch point for customers to communicate with
companies on their own terms.

16. • Another touch point is through point-of-sale interaction
in store or at information kiosks.
• Many POS software programs enable customers to
easily provide information about themselves without
feeling violated.
• The information is then used for marchandising
activities, and to accurately find out the best customers
and the types of products they buy.
• Also used to increase customer satisfaction by
developing in-store services and customer recognition p
rogram

17. Capture Customer Data
• In CRM system, the issue is not how much data can b
e obtained, but rather what types of data should be ac
quired and how the data can effectively be used for rel
ationship enhancement.
• The traditional approach for acquiring data is through c
hannel interactions – store visits,
• conversation with sales person,
• interaction via web,
• conversation on phone, etc.

18. • In a CRM system, channel interactions are viewed
as prime information sources based on the channel sel
ected to initiate the interactions rather than on the data
acquired.
• For Example , Customer logs on sony web site ……No
solution…..Quora……Q-S……Sony to customer.
• Such interaction can provide large amounts of data.

19. Store and Integrate Customer Data
• Gathering the data is complecated by the fact that
data needed by one unit of the organisation such as
sales and marketing are often generated by another
area of business or even a third party supplier, such as
independent marketing research firm

20. • Thus, company must use IT to capture, store, and
integrate strategically important customer information.
This process of centrailzing data in CRM system is ref
erred to as data warehousing.
• Data Warehousing
• is a central repository (database) of customer data coll
ected by an organisation.
• It is a large computerized file of all information collecte
d in the previous phases of CRM process
– Info collected in channel
– Transactions
– Product/Service touch points

21. • The core of DW is the Database,
• Database
• it is a collection of data, especially one that can be
accessed and manipulated by computer software.
• The CRM database focuses on collecting vital
statistics on –
– Consumers
– Their purchasing habits (Eg. Brand loyal, Attracted to Disc)
– Transaction methods (Eg. EMI, Credit card, Cash)
– Product usage (Eg. Frequency of buying)
• In a centralized repository (DW) that is accessible by
all functional areas of the company.
• By utisising a DW, mktg managers can quickly access
a vast amount of information required to make
decisions

22. • When company builds its database, usually the first
step is to develop a list.
• A Response List
• is based on customers who have indicated interest in
a product or service, or who have responded to an offe
r of some kind such by –
– mail,
– telephone,
– product rebates,
– contests or sweepstakes etc,
– Eg. Add to cart on online shopping app.
• Response list is valuable because past behaviour is a
strong predictor of future actions

23. • Consumers who have indicated interest in the product
or services are more prone to purchase.
• Companies may find it valuable to enhance their custo
mer records with information about the customers’ or p
rospective customers’ demographics and lifestyle char
acteristics.
• They often accomplish this by augmenting the records
with compiled lists.

24. • Compiled Lists
• are collected by outside company that has collected
names and contact information for potential customers
• These information is usually obtained from telephone
directories and membership rosters of various groups.

25. • Customer database becomes even more useful to mar
keting managers when it is enhanced to include more t
han simply a customer’s or prospect’s name, adress, t
elephone number, and transaction history.
• Database enhancement involves purchasing informati
on on customers or prospects to better describe their n
eeds or determine how rwsponsive they might be to m
arketing programs.
– Types of enhancement data typically include demographic, lif
estyle, or behavioural information.

26. Identify the Best Customers

27. • 80% of a company’s revenue is generated by 20% of
its customers.
• Therefore it is very important for a company to identify
the best customers who yield high profits.

28. How to identify best customers????
• Data Mining
• DM is used to find hidden patterns and R’ships in the
customer data stored in the data ware house.
• It is data analysis approach that identifies patterns of
characteristics that relates to particular customers or
customer groups.
• Data mining is typically performed on small data sets
containing as few as 300 to 400 customers. The numb
er has increased due to sophisticated technology and
data warehouses.

29. • When using Data mining, it is important to remember
that the real value is in the company’s ability to
transform its data from operational bits and bytes into
information marketers need to successful marketing
strategy.
• Companies must analyse the data to identify and
profile best customers, calculate their lifetime value,
and ultimately predict purchasing behaviour through
statistical modeling.

30. • Before leveraging on information , several types of ana
lysis are often run on data.
• These analysis
– Customer Segmentation
– Recency-Frequency-Monetary Analysis (RFM Analysis)
– Lifetime Value Analysis (LTV)
– Predictive Modeling

31. • Customer Segmentation
• Process of breaking large groups into smaller, more
homogeneous groups.
• It generates a “Profile” or picture of customers’ similar
demographics, geographic and psychographic traits
as well as their previous purchase behaviour.
• Then compared and contrasted with other customer
segments.
• Ex. Bank could segment consumers based on freq
uency of usage, credit, age and turnover.

32. • RFM Analysis
• Customers who have purchased recently (Recency),
• Customers who have purchased often (Frequency),
• Customer who have spent considerable money
(Monetary)
• RFM identifies those customers are more likely to
purchase again because they bought recently, bought
frequently, or spent a specified amount of money.
• After conducting the RFM the top 20% customer in
analysis results are considered best

33. • Lifetime Value Analysis (LTV Analysis)
• Where RFM looks at how valuable a customer recently
to the company, LTV projects the future value of the
customer over a period of years.
• One of the basic assumptions in LTV calculation is that
marketing to repeat customers is more profitable than
marketing to first time buyers.

34. • Predictive Modeling
• The ability to reasonably predict future customer
behaviour gives marketers a significant competitive
advantage.
• Through predictive modeling, marketers try to
determine, based on some past set of occurrences,
what the odds are that some other occurrence, such
as an internet inquiry or purchase, will take place in
the future.
• SPSS Predictive Marketing is one tool marketers can
use to answer questions about their consumers.

35. Leverage Customer Information
• Data mining identifies the most profitable customers
and prospects. Managers can then design tailored
marketing strategies to best appeal to the identified
segments.
• In CRM, this is commonly referred to as leveraging
customer information to facilitate enhanced
relationship with customers.

36. Common CRM marketing Database Applications (Uses)
1. Campaign management
2. Retaining loyal customers
3. Cross Selling other products and services
4. Designing targeted marketing communication
5. Reinforcing customer purchase decisions
6. Inducing product trial by new customers
7. Increasing effectiveness of distribution channel marketing
8.Improving customer service

37. 1. Campaign management
• Campaign management involves monitoring and leveragi
ng customer interactions to sell a company’s products
and to increase customer service.
• It includes monitoring the success of the communications
based on customer reactions through sales, orders,
callbacks to the company, and the like.
• CM involves developing customized product and service
offerings for the appropriate customer segment, pricing
these offerings attractively, and communicating these
offers in a manner that enhances customer R’ship.

38. 2. Retaining Loyal Customers
• After identifying the best customers the company should
make the efforts to maintain and increase their loyalty.
• When a company retains an additional 5% of its custom
er each year, profit will increase by as much as 25%.
• Loyalty programs reward loyal customers for making
multiple purchases.
• Ex. 1) Marriott hotels reward their best customers with s
pecial perks
• 2) Flipkart ‘Super coin’ 1 coin per Rs. 100 spent
• 3) Jet Privilege - now known as InterMiles for frequent
flyer – Ponints can be redeemed for shopping.
• 4) Zomato Gold- Dine out

39. 3. Cross-Selling other Products and Services
• CRM provides opportunities to cross sell related produc
ts and services based on matching the product profile a
nd customer profile which can match their demographic
s, lifestyles, or behavioural characteristics.
• Internet companies use product and customer profiling t
o reveal cross-selling opportunities while customer is s
urfing their site.
• Cross-selling is nowadays mostly used by online shops
• Ex. 1) While buying Smart phone – they also offer Tem
pered glass, or Back cover, or Ear phones.
• 2) Smart phone + smartphone insurance
• 3) Credit cards + Instant loans

40. 3. Designing Targeted Marketing Communication
• Using Transactions and Purchase data, a database
allows marketers to track Customer R’ships to the
company’s products and services to modify the
marketing message accordingly.
• Customer can also be segmented into:
– Infrequent users: Comm. with IFU might encouraged through
direct incentives such as a Limited time price discount
– Moderate users: Comm. with MU may use fewer incentives
and more reinforcement of past decisions accompanied with
little price discount.
– Heavy users: Comm. with HU would be designed around loyal
ty and reinforcement of purchase rather then price promotions.

41. 4. Reinforcing Customer Purchase Decisions.
• As we learned cognitive dissonance – inconsistency
between their values – opinions – purchase behaviour.
In other words they doubt the soundness of their purch
ase decision and often feel anxious.
• CRM offers marketers an excellent opportunity to reac
h out to customers to reinforce the purchase decision
• By thanking customers for their purchases and telling t
hem they are important, marketers can help cement lo
ng-term, profitable R’ship.
• Ex. Postsale mails or sms of thanks

42. 5. Inducing Product Trials
• Although significant time and money are expended on
encouraging repeat purchase by the best customers, a
marketing database is also used to identify new
customers.
• Because the firm using a marketing database already
has a profile of its best customers, it can easily use the
results of modeling to profile potential customers.
• Mktg managers generally uses demographic and
behavioural data of existing customers to develop
detailed customer profile that is a powerful tool for
evaluating the lists of prospects.
• Eg. If a firms best customers are 35 to 50 years of
age , live in suburban areas and enjoy travelling. Then
company can induce the same profiled prospects.

43. 6. Increase effectiveness of Distribution Channel Mgmt
• Marketing channel is a business structure of interdepen
dent organisation.
• M’rer  Distributor WholesalerRetailer Consumer
• The marketer of the company do not have direct interact
ion with the ultimate consumer, rather its only the R’ship
between retailers and consumer.
• But with the help of CRM now a days manufacturer can
get the information about the customer who is buying its
product, and accordingly formulate the strategies.
• Eg. The automobile manufacturers today using website t
o keep in touch with customers and prospects, tey learn
about their needs and requirements.

44. 7. Improving Customer Service
• CRM marketing techniques increasingly are being used
to improve customer services.
• Ex. Amazon, based on wish list and past purchases
makes the decision of customers easy by recommending
them related products

45. 8. Privacy concerns and CRM
• Before rushing out to invest in CRM system and build
a database, marketer should consider consumers’ rea
ctions to growing use of database.
• Customer around the world are concerned about the
misuse of their data.