CHAPTER 1:

CONCEPTUAL FRAMEWORK OF ‘CRM’

“Listening to customers must become everyone’s business. With most competitors moving
ever faster, the race will go to those who listen and respond more intently”.
~ Tom Peters, Thriving on Chaos

What is customer relationship management?

Before we begin to examine the conceptual foundations of CRM, it will be useful to define
what CRM is. A narrow perspective of customer relationship management is database
marketing emphasizing the promotional aspects of marketing linked to database efforts.
Another narrow, yet relevant, viewpoint is to consider CRM only as customer retention in
which a variety of after marketing tactics is used for customer bonding or staying in touch
after the sale is made.

Shani and Chalasani define relationship marketing as “an integrated effort to identify,
maintain, and build up a network with individual consumers and to continuously strengthen
the network for mutual benefit of both sides, through interactive, individualized and value-
added contacts over a period of time”.

The core theme of all CRM and relationship marketing perspectives is its focus on co-
operative and collaborative relationships between the firm and its customers, and/or other
marketing actors. CRM is based on the premise that, by having a better understanding of the
customers’ needs and desires we can keep them longer and sell more to them.

Growth Strategies International (GSI) performed a statistical analysis of Customer

satisfaction data encompassing the findings of over 20,000 customer surveys conducted in 40
countries by Infoquest.

The conclusions of the study were:

 A Totally Satisfied Customer contributes 2.6 times as much revenue to a company as
a Somewhat Satisfied Customer.

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  A Totally Satisfied Customer contributes 17 times as much revenue as a Somewhat
Dissatisfied Customer.
 A Totally Dissatisfied customer decreases revenue at a rate equal to 1.8 times what a
Totally Satisfied Customer contributes to a business.
 By reducing customer defection (by as little as 5%) will result in increase in profits by
25% to 85% depending from industry to industry.

An important facet of CRM is “customer selectivity”. As several research studies have shown
not all customers are equally profitable (Infact in some cases 80% of the sales come through
20% of the customers). The company must therefore be selective and tailor its program and
marketing efforts by segmenting and selecting appropriate customers for individual
marketing programs. In some cases, it could even lead to “outsourcing of some customers” so
that a company better utilize its resources on those customers it can serve better and create
mutual value. However, the objective of a company is not to really prune its customer base

Customer Relationship management is a comprehensive strategy and process of acquiring,

retaining and partnering with selective customers to create superior value for the company
andtotheidentify
but customer.
appropriate customer programs and methods that would be profitable and
create value for the firm and the customer. Hence, CRM is defined as:

As is implicit in the above definition, the purpose of CRM is to improve marketing

productivity. Marketing productivity is achieved by increasing marketing efficiency and by
enhancing marketing effectiveness. In CRM, marketing efficiency is achieved because
cooperative and collaborative processes help in reducing transaction costs and overall
development costs for the company. Two important processes for CRM include proactive
customer business development and building partnering relationship with most important
customers. These lead to superior value creation.

The basic concept is that the customer is not someone outside the organization; he is a
part of the organization.

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 Key CRM Principles
 Differentiate Customers: All customers are not equal; recognize and reward best
customers disproportionately. Understanding each customer becomes particularly
important. And the same customers’ reaction to a cellular company operator may be quite
different as compared to a car dealer. Besides for the same product or the service not all
customers can be treated alike and CRM needs to differentiate between a high value
customer and a low value customer.
What CRM needs to understand while differentiating customers is?
 Sensitivities, Tastes, Preferences and Personalities
 Lifestyle and age
 Culture Background and education
 Physical and psychological characteristics
 Differentiating Offerings
 Low value customer requiring high value customer offerings
 Low value customer with potential to become high value in near future
 High value customer requiring high value service
High value customers who require a h
 High value customer requiring low value service

Low value customers who require high levels of service must either purchase the higher level of servic

High

Low

Low High
Fig. 1 Customer value – Service Matrix
 Keeping Existing Customers

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 Grading customers from very satisfied to very dissatisfied should help the organization in
improving its customer satisfaction levels and scores. As the satisfaction level for each
customer improves so shall the customer retention with the organization.
 Maximizing Life time value
Exploit up-selling and cross-selling potential. By identifying life stage and life event
trigger points by customer, marketers can maximize share of purchase potential. Thus the
single adults shall require a new car stereo and as he grows into a married couple his
needs grow into appliances.
 Increase Loyalty
Loyal customers are more profitable. Any company will like its mindshare status to
improve from being a suspect to being an advocate.

Company has to invest in terms of its product and service offerings to its customers. It has to
innovate and meet the very needs of its clients/ customers so that they remain as advocates on
the loyalty curve. Referral sales invariably are low cost high margin sales.
High

*You have No Choice But To Handle Them *Cultivate Relationship.

Strategic Importance To Your Business Plan

Very Carefully. Will Consume Energy Spend Energy.

Go Out Of Your Way.
# Think Of Innovative Ways of Getting them *Existin
On Your Side, But The ‘Cost Of Acquisition’ #Think Of Strategies TO Move Them Away
Custom
From Competition. Will Consume
Must Be Controlled
Disproportionately High Energy.

*Focus On Short Term Profitability. *Very cautious decision needed. Re-examine

#Poten
Spend Minimum Energy To Meet Your business Plan & Strategy. Evaluate That Your
Loss (i.e. Your competitor’s gain) Doesn’t Custom
Objectives.
become nightmare for you.

#Don’t Pursue. #Needs In-depth strategic review as

Use Opportunity As It Comes. acquisition alone and dissatisfaction later
Short Term Acquisition Shouldn’t Affect could be more harmful
Long Term Image.
Low

Low High
Fig. 2 Categorizing Customers – Relationship & Profitability Potential

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Summarizing CRM activities:
The CRM cycle can be briefly described as follows:
1. Learning from customers and prospects, (having in depth knowledge of customer)
2. Creating value for customers and prospects
3. Creating loyalty
4. Acquiring new customers
5. Creating profits
6. Acquiring new customers
Learning from
customers a&
Creating prospects
Profits
Acquiring new
customers 1 Fig.3 CRM Activities
5
3 Creating value
4 for customers &
prospects

Creating loyal 2
customers

Fig. 4 Customer Life Cycle Management

Customer Need
Assessment & Acquisition

Customer Retention
and referrals for new
customers
Customer Development
through personalization and customization

Customer Equity Leverage through

Cross Selling and Up Selling

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The Emergence of CRM Practice

THE PAST:
Looking back at a snapshot history of marketing, we can see the following clear developments
four decades:
 1960’s – the era of Mass Marketing, when Gibbs SR toothpaste began the first marketing o
white campaign.
 1970’s – saw the beginning of segmentation, direct mail campaigns and early telemarketing (
 1980’s – where Niche marketing made millionaires of those who were best at it.
 1990’s – Relationship Marketing. The explosion of telemarketing and call centres, all set up
customers. The recognition of the true value of retention and the use of Lifetime Value as a b
In addition to this, a number of key marketing concepts can also be used to see where

CRM has developed from:

 Satisfying Needs, Customer Orientation
 The organization needs to be arranged so that all functions contribute
 Profit must be the consequence of delighting customers (Kotler)
Developing customer relationship has historical antecedents going back into the pre industria
developed customized produce for each customer. Such direct interaction led to relational bond
the consumer. It was only after industrial era’s mass production society and the advent of the m
frequent interactions between producers and the consumers leading to transactions oriented m
consumption factions got separated leading to marketing functions being performed by the midd

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In recent years however, several factors have contributed to the rapid development and
evolution of CRM. These include: -

1. The growing de-intermediation process in many industries due to the advent of

sophisticated computer and telecommunication technologies that allow producers to
directly interact with end-customers. For example, in many industries such as airlines,
banks insurance, software or household appliances and even consumables, the de-
intermediation process is fast changing the nature of marketing and consequently making
relationship marketing more popular. Databases and direct marketing tools give them the
means to individualize their marketing efforts.
2. Advances in information technology, networking and manufacturing technology have
helped companies to quickly match competition. As a result product quality and cost are
no longer significant competitive advantages.
3. The growth in service economy. Since services are typically produced and delivered at
the same institution, it minimizes the role of the middlemen.
4. Another force driving the adoption of CRM has been the total quality movement. When
companies embraced TQM it became necessary to involve customers and suppliers in
implementing the program at all levels of the value chain. This needed close working
relationships with the customers. Thus several companies such as Motorola, IBM,
General Motors, Xerox, Ford, Toyota, etc formed partnering relations with suppliers and
customers to practice TQM. Other programs such as JIT and MRP also made use of
interdependent relationships between suppliers and customers.
5. Customer expectations are changing almost on a daily basis. Newly Empowered
customers who choose how to communicate with the companies across various available
channels. Also nowadays consumers expect a high degree of personalization.
6. Emerging real time, interactive channels including e-mail, ATMs and call centre that
must be synchronized with customer’s non-electronic activities. The speed of business
change, requiring flexibility and rapid adoption to technologies.
7. In the current era of hyper competition, marketers are forced to be more concerned with
customer retention and customer loyalty.
8. As several researchers have found out retaining customers is less expensive and more
sustainable competitive advantage than acquiring new ones.
9. On the supply side it pays more to develop closer relationships with a few suppliers
than to develop more vendors.

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 10. In addition several marketers are concerned with keeping customers for life than making
one time sale. There is a greater opportunity for up selling and cross selling. In a
recent study, Naidu, et al(1999) found that relational intensity increased in hospitals
facing a high degree of competitive intensity
11. The globalization of world marketplace makes it necessary to have global account
management for the customers.

MANAGEMENT & GOVERNANCE

FORMATION

Purpose Role Specification PERFORMANCE

 Increase
Effectiveness Team Structure
 Improve Efficiency
Relationship
-
Performance
Planning Process  Strategic
 Financial
Programs  Marketing
 Account ~ Retention
Process Alignment
Management
 Retention Marketing
 Co-op Agreements
Monitoring Process

Communication
Partners
 Criteria Employee Motivation
 Process

Employee Training

Evolution
 Enhancement
 Improvement
-

Fig. 5 CRM Process Framework

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CRM Purpose
The overall purpose of CRM is to improve marketing productivity and enhance value for
parties in involved in the relationship. By seeking and achieving operational goals, such as
lower distribution costs, streamlining order processing and inventory management, reducing
the burden of excessive customer acquisition cost, and through customer retention
economics, firms could achieve greater marketing efficiencies. They can enhance marketing
effectiveness by carefully selecting, customers for its various programs, individualizing and
personalizing their market offerings to anticipate and serve the emerging needs of individual
customer, building customer loyalty and commitment, partnering to enter new markets and
develop new products, and redefining the competitive playing field for their company. Thus,
stating the objectives and defining the purpose of CRM in a company helps clarify the nature
of CRM programs and activities that ought to be performed by the partners. Defining the
purpose would also help in identifying suitable relationship partners who have necessary
expectations and capabilities to fulfill mutual goals. It will further help in evaluating CRM
performance by comparing results achieved against objectives. These objectives could be
specified as financial goals, marketing goals, strategic goals, operational goals, and general
goals.

Customers are motivated to engage in relational behavior because of psychological and

sociological benefits associated with reduction in choice decisions. In addition, to their
natural inclination of reducing choices, consumers are motivated to seek the rewards and
benefits associated with CRM programs.

Relational Parties
In the Initial phase, a company has to decide which customer type and specific customers or
customer groups will be the focus of their CRM activities.

CRM Programs
A careful review of literature and observation of corporate practices suggest that there are
three types of CRM programs: continuity marketing; one-to-one marketing; and, partnering
programs. These take different forms depending on whether they are meant for end-
consumers, distributor consumers, or business-to-business customers.

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TABLE 1- Presents various types of CRM programs developed for different types of customers
Customer Types Mass Markets Distributors B to B Markets
Program Types
Continuity Marketing  After- Marketing  Continuous  Special Sourcing
Arrangements
 Loyalty Programs Replenishment
 Cross-Selling  ECR Programs
One-to-One Marketing  Permission  Customer Business  Key Account
 Global Account
Marketing Development
 Personalization
Partnering/Company-  Affinity Partnering  Logistics Partnering  Strategic
Partnership
Marketing  Co-Branding  Joint Marketing
 Co-Design
 Co-Development

 Continuity Marketing Programs

Take the shape of membership and loyalty card programs where customers are often
rewarded for their member and loyalty relationships with the marketers. The basic
premise of continuity marketing programs is to retain customers and increase loyalty
through long-term special services that has a potential to increase mutual value through
learning about each other.

 One-to-one Marketing
Meeting and satisfying each customer’s need uniquely and individually. In the mass
markets individualized information on customers is now possible at low costs due to the
rapid development in the information technology and due to availability of scalable data
warehouses and data mining products. By using online information and databases on
individual customer interactions, marketers aim to fulfill the unique needs of each mass-
market customer. Information on individual customers is utilized to develop frequency
marketing, interactive marketing, and after marketing programs in order to develop
relationship with high-yielding customers. In the context of business-to-business markets,
individual marketing has been in place of quite some time. Known as Key Account
Management Program, here marketers appoint customer teams to husband the company
resources according to individual customer needs.

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 Partnering Programs
The third type of CRM programs is partnering relationships between customer and
marketers to serve end user needs. In the mass markets, two types of partnering programs
are most common: co-branding and affinity partnering.

CRM Governance Process

 Greater the scope of CRM program and process nor is it possible to involve all
associated tasks, and the more complex of them for relationship marketing
is the composition of the relationship programs for the mass markets.
management team; the more critical is
the role specification decision for the  Operating process between the
partnering firms. company and customer partners:
Operating alignment will be needed in
 It is essential to establish intra-company order processing, accounting and
communication particularly among all budgeting processes, information
concerned individuals and corporate systems, merchandising process, etc
functions that directly play a role in
managing the relationship with a  Human resources decisions are also
specific customer or customer group. important in creating the right
organization climate for managing
 With mass-market customers frequent relationship marketing. Training
face-to-face interactions will be employees to interact with customers,
uneconomical. Thus marketers should to work in teams, and manage
create common bonds through symbolic relationship expectations are important.
relationships, endorsements, affinity So is the issue of creating the right
groups, and membership benefits or by motivation through incentives and
creating online communities rewards.

 Involving customers in the planning  Periodic evaluation of goals and results,

process would ensure their support in initiating changes in relationship
plan implementation and achievement structure, design or governance process
of planned goals. All customers are not if needed, creating a system for
willing to participate in the planning

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 CRM Performance Evaluation Process
Without a proper performance metrics to evaluate CRM efforts, it would be hard to make
objective decisions regarding continuation, modification, enhancement, or termination of CRM
programs.

If co-operative and collaborative relationship with the customers is treated as an intangible

asset of the firm, its economic value add can be assessed using discounted future cash flows
estimates. Here the term relationship equity comes in where you measure the intangible assets
of the firm.

Another global measure used by firms to monitor CRM performance is the measurement of
relationship satisfaction. By measuring relationship satisfaction, one could estimate the
propensity of either party’s inclination to continue or terminate the relationship. Such
propensity could also be indirectly measured by measuring customer loyalty.

CRM Implementation Issues

Technical Customer
Factors Focus

Main Reasons
Data and for FAILURE Organizational
Warehousing
Management
Requirements

Team Project
Members Management

One of the most interesting aspects of CRM development is the multitude of customer
interfaces that a company has to manage in today’s context. Until recently, a company’s
direct interface with the customers, if any was primarily through sales people or service
agents. In today’s environment most companies interface with their customers through a

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variety of channels including sales people, service personnel, call centres, Internet websites,
marketing departments, fulfillment houses, market and business development agents, etc. For
large customers it also includes cross-functional teams that may include personnel from
various functional departments. While each of these units could operate independently, they
still need to share information about individual customers and their interactions with the
company on a real time basis. For example, a customer who just placed an order on the
Internet and subsequently calls the call centre for order verification expects the call centre
staff to know the details of his or her order history. Similarly a customer approached by a
sales person unaware that she has recently complained about dissatisfactory customer service,
is not likely to be treated kindly by the customer.

Therefore effective CRM requires a front-line information system that shares relevant
customer information across all interface units. Relational databases, data warehousing and
data mining tools are thus very valuable for CRM systems and solutions.

However, the challenge is to develop and integrated CRM platform that collects relevant data
input at each customer interface and simultaneously provides knowledge output about the
strategy and tactics suitable to win customer loyalty and support. If a call centre personnel
cannot identify or differentiate a high value customer and does not know what to up-sell or
cross sell to him then it would be a tremendous loss of opportunity for the company.
Although most CRM software solutions based on relational databases are helping share
customer information, they still do not provide knowledge output to the front line personnel.
As shown in Figure.6, CRM solutions platform needs to be based on interactive technology
and processes. It should assist the company in developing and enhancing customer
interactions and one-to-one marketing through the help of suitable intelligent agents that help
develop front-line relationship with customers. Such a system would identify appropriate data
inputs at each customer interaction site and use analytical platforms to generate appropriate
knowledge output for front-line staff during customer interactions.

In addition, implementation tools to support interactive solutions for customer profitability

analysis, customer segmentation, demand generation, account planning, opportunity
management, contact management, integrated marketing communication, customer care
strategies, customer problem solving, virtual team management of large global accounts, and
measuring CRM performance would be the next level of solution sought by most enterprises.

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 Internet
Sales
Group Knowledge
Data Input
Output
Knowledge
Data Input
Integrated Marketing Output
Information Platform
Knowledge Information Content Data Input
Output Relational Databases Call Centre
Decision Support System
Market Active Intelligence Knowledge
Development Data Input Business Rules Output
Collaborative Communication
Knowledge  User Profiles Data Input
Output

Knowledge
Data Input Customer
Output
Marketing Operations/
Service

Fig. 6 Information Platform for CRM

Since CRM implementation comprises a significant information technology (IT) component,

these companies have handed over the responsibility of CRM implementation to information
technology departments. They are focused on simply installing CRM software solutions
without a CRM strategy or program in place. This leads to creating an operational tool within
the company, but the usability and effectiveness in producing desirable results from such
tools is limited. CRM tools would be valuable when they are used to identify and differentiate
individual customers and to generate individualized offer and fulfill customized solutions.
The lack of CRM strategy or CRM programs would leave the front-line people without any
knowledge of what they should be doing with the additional customer information that they
now have access to. For those who apply themselves and develop improvised solutions, it
could backfire as ad hoc solutions could cause unintended deterioration in customer
relationships. Appropriate strategy and excellent implementation are both needed for
obtaining successful results.

From a corporate implementation point of view, CRM should not be misunderstood to

simply mean a software solutions implementation project.

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 CHAPTER 2:
CRM & RELATED CONCEPTS

Knowledge Management (KM) with focus on CRM

As Peter Drucker defined “Information is data endowed with relevance and purpose”

To effectively implement a CRM solution it is very important to identify real knowledge

about different types of customers (Viz. Most valued customers, Most growable customers,
Below zero customers) from plethora of internal and external data, figures, surveys, etc. A
straightway technique is to create a data warehouse, thereafter information which is required
to effectively implement principles of CRM, could be mined out of this data warehouse.

Marketing, sales after-sales people would be knowledge workers. Front office could be more
productive if they could utilize customer knowledge. Knowledge Management (KM) is about
embracing a diversity of knowledge resources, like legacy systems, existing data warehouses,
portals, websites, customers, suppliers, partners, external marketing research agencies and
cultivating the knowledge where it resides.

Metrics, ROI, Balance Scorecard method, benchmarking are some of the common
technique of KM system evaluation. KM implementation is the key to CRM. It’s a proven
fact that 80% of organizations revenue comes from 20% of its customers, it becomes
imperative to design CRM solutions keeping in mind these most valuable customers and to
leverage 80% non – structured data of about 20% of these most valuable customers.

Just as more tangible corporate assets like computer systems have a finite shell life, so too
does knowledge, it must be available at the right time to be able to act upon it. Retaining tacit
knowledge (derived from experiences, data and documents) means retaining the individual,
which is invariably not possible. It is possible to generate explicit knowledge from tacit
knowledge, but it’s a complex exercise. The key ingredient of this exchange is face to face
sharing of knowledge or virtual environmental tools like Lotus Notes, which can facilitate
tacit knowledge exchange. Hence for tacit knowledge exchange text mining is very useful

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and important. There are ways to do text mining, like search engines, web solutions, text
analysis tools, etc. The key to successful customer KM is personalization, i.e. how to extract
the knowledge that is pertinent to the user and translate it into a format that is easily
understood. The choice of Customer Knowledge Management (CKM) architecture should
have a layered approach. Existing systems should be seamlessly linked with the proposed
layer. The choice for CKM system could be Web (Enterprise information portal) or a
packaged solution such as Lotus Notes, Microsoft solution.

Role of CRM in the Context of SCM

In the context of SCM, where alliances and partnerships are keys to success, CRM plays an
important role in building long-term relationships. Apart from the end-users, it involves
internal employees, channel members and other external entities such as advertising agencies
and consulting organizations. The success of relationships depends upon sharing of savings
from the supply chain, which may be reinvested to further enhance its efficiency, and sustain
the competitive advantage.

The supply chain of tomorrow will look like a virtual organization, seamlessly integrated
through sharing data and savings as well. The bonding between partners will be closely held
by CRM practices.

ERP and CRM

Like ERP, CRM solutions focus on automating and improving business processes, albeit in
front-office areas such as marketing, sales, customer service, and customer support. Whereas
ERP implementation can result in improved organizational efficiency, CRM aims to provide
organizational effectiveness by reducing sales cycle and selling cost, identifying markets and
channels for expansion, and improving customer value, satisfaction, profitability, and
retention. While CRM applications provide the framework for embodying, promoting and
executing best practices in customer facing activities; ERP provides the backbone, resources
and operational applications to make organizations more efficient in achieving these goals.

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Regain Management
“The cost of acquiring a new customer is 9 to 12 times that of holding on to an
existing customer.” ~ Philip Kotler

A study conducted by Andersen Consulting in conjunction with EIU found that businesses
are intensifying their focus on customer and are taking a more process oriented approach to
customer relationship management. Key Findings of the study are:
(a) the number of businesses citing customer retention as a critically important measure in
the next 5 years has jumped to nearly 60%, as companies shift their focus from attracting
new customer to retaining their more profitable ones;
(b) by 2002, 83% of companies expect to have customer data warehouses, up from about
40% today; and
(c) companies predict their use of Internet to collect customer data will surge by 430%

Consumer Life Time Value

Quantifying the “value” of customers is absolutely essential in regain management. In fact,
the percentage of profit a company makes from continued sales to its own customer base is
consistently higher than the profit made on original sale. Each of the customers then delivers
an income stream and the stream of profit far exceeds the value of original purchase. Income
streams contribute cash flows in terms of years for any single product.

Regain Strategies:
 Customization
 Differentiation Strategies

The lost customer would be segmented differently from the existing customer. Base and the
company could provide additional features and benefits to win them back.

“Wow” Syndrome
For example, a client checks into a hotel and his/her room isn’t ready. The clerk could
respond by “You are in luck! Your room isn’t ready. That means you get to eat breakfast “on
us” and use our business centre for free!”

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 CHAPTER 3:
TECHNOLOGICAL TOOLS FOR CRM

TOOLS

 Customer database
A good customer information system should consist of a regular flow of information,
systematic collection of information that is properly evaluated and compared against
different points in time, and it has sufficient depth to understand the customer and
accurately anticipate their behavioral patterns in future. The customer database helps the
company to plan, implement, and monitor customer contact. Customer relationships are
increasingly sustained by information systems. Companies are increasingly adding data
from a variety of sources to their databases. Customer data strategy should focus on
processes to manage customer acquisition, retention, and development.

Other Technologies that are used are as follows:

 Electronic Point of Sale(EPOS)
 Sales Force Automation
 Customer Service Helpdesk

 Call Centres
Call Centre helps in automating the operations of inbound and outbound calls generated
between company and its customer. These solutions integrate the voice switch of
automated telephone systems (e.g. EPABX) with an agent host software allowing for
automating call routing to agents, auto display of relevant customer data, predictive
dialing, self service Interactive Voice Response systems, etc. These systems are useful in
high volume segments like banking, telecom and hospitality. Today, more innovative
channels of interacting with customers are emerging as a result of new technology, such
as global telephone based calls centres and the internet. Companies are now focusing to
offer solutions that leverage the internet in building comprehensive CRM systems
allowing them to handle customer interactions in all forms.

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  Systems Integration
While CRM solutions are front office automation solutions, ERP is back office automation
solution. An ERP helps in automating business functions of production, finance, inventory,
order fulfillment and human resource giving an integrated view of business, where as CRM
automates the relationship with customer covering contact and opportunity management ,
marketing and product knowledge, sales force management, sales forecasting, customer order
processing and fulfillment, delivery, installation, pre-sale and post-sale services and
complaint handling by providing an integrated view of the customer. It is necessary that the
two systems integrate with each other and complement information as well as business
workflow. Therefore, CRM and ERP are complementary. This integration of CRM with ERP
helps companies to provide faster customer service through an enabled network, which can
direct all customer queries and issues through appropriate channels to the right place for
speedy resolution. This will help the company in tracking and correcting the product
problems reported by customers by feeding this information into the R&D operations via
ERP.

CRM – A FRAMEWORK

Traditional Approach to CRM Web-Enabled & Integration

Approach
 Customer Contact by
 Customer Information
 Telephone
 System
 Mail Integration
with  Customer Database
 In Person
technology  Electronic Point of Sale
 Personal Selling
 Sales Force Automation
 After Sales Service
(Web & Internet)  Automation of Customer
 Complaint Handling
 Support
 Account Management
 Call Centres
 Customer care
 Customer Satisfaction  Systems Integration
 Lifetime value of a Customer

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Data Mining for CRM: Some Relevant issues
Data mining is an important enabler for CRM. Advances in data storage and processing
technologies have made it possible today to store very large amounts of data in what are
called data warehouses and then use data mining tools to extract relevant information. Data
mining helps in the process of understanding a customer by providing the necessary
information and facilitates informed decision-making.
Operational CRM solutions involve integration of business processes involving customer
touch points. Collaborative CRM involves the facilitation of collaborative services (such as e-
mail) to facilitate interactions between customer and employees. All this effort produces rich
data that feeds the Analytical CRM technologies.

Operational CRM Analytical CRM Collaborative CRM

Customer

Fig.8 Interactions between CRM Technologies

Information Requirements Of An Effective CRM Solution

The employees of a firm employing CRM would require rich information about their firm
and customer base including:
 Information about the market
 Information about the firm
 The current segment
 Demographic Distribution (by age, sex, education, income, marital status, etc)
 The firm’s best customers and the segment they belong to, products they buy
preferences, habits and tastes of each segment.
 Individual level information consisting of:
 Customer personal details such as name, address, family details, education, etc
 The customer group /segment to which the individual belongs.
 History of present and past behavior

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  Likes, dislikes, habits and preferences
 Events coming up in their personal life etc.

Levels Of Data Mining Operations

The aggregate or the Macro level
Mining at the macro level gives us a broad overview of the data e.g. when customers of the
retail store are segmented by profitability criteria, we obtain clusters that are profitable to
various extents. Knowledge obtained by mining at macro level is useful when dealing with
situations where:
 We are dealing with a customer about whom we do not have individual information.
Hence, we need to extrapolate the characteristics of the group to which he/she might
belong. In retail store example, a store can segment its customers on basis of age and
characteristics can be extracted. When a new customer enters the store, the salesman
could use his intuition in arriving at the customer’s age and recover the
characteristics of that age group such as the frequently bought products, color
preferences, etc.
 Targeting new set of customers. If the retail chain has opened a new store it can use
the data from the most similar current store to predict the behavior of the new
prospects.
 We are dealing with aspects of the service, which influence a majority of the
customer and therefore cannot be customized to suit individual tastes, example being
the design of the physical layout of a retail store.
 Predicting the possibility of an action that the cu has never undertaken. A customer
might not have tried out a new product because he/she was not aware of it. A
salesman can encourage him/her to try out the product if his/her profile matches that
of the current product users.

The Individual or Micro level

As interactions of the individual with the firm increases, the firm obtains more data about
him/her. Offering individualized value adding propositions can strengthen relationship with
the individual customer. For this, we need to track the cu and mine at the individual or micro
level. Some important features to note about mining at this level are:

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  Micro-level mining provides specific information about a particular customer. For
example, the retail store can go to the extent of finding out the preferred colours of his
shirt
 A firm takes up micro level mining to build a detailed customer profile of a regular
customer.
 Data mining this level might be expensive if the data mining tool has to cull out
individual information from a large database. Having a separate database for
profitable customer might be helpful.
 Knowledge obtained at the individual level is useful in situations where:
 The firm wants to customize its offering to the customer based on the customer’s
tastes and preferences e.g. the retail store can offer discounts on the purchase of a
bundle of products that the customer prefers buying together.
 The firm wants to assist the purchase of a new product based on the information it
has of the last purchase. For example, if a customer has bought a suit in his visit,
then the store might offer a discount on the purchase of a tie of a matching color.
 The firm wants to take advantage of the personal events in a customer’s life (e.g.
birthdays, anniversaries, birth of child etc.) to further cement the precious
relationship.
 Current patterns that go against usually observed customer behavior point to
interesting phenomenon. If retail customer suddenly switches brand then he/she
might not be satisfied with the last purchase.

The most common operations used at this level are: -

Classification:
Classification is a process that maps a given data item into one of the several predefined
classes. CRM uses classification for a variety of purposes like behavior prediction, product
and customer categorization.

Regression
Regression is the operation of learning a function that predicts the value of a real valued
dependent variable based on values of other independent variables. Regression finds
application in a CRM environment where prediction needs to be made about the behavior
regarding real value added variables. Suppose the retail store collects data on the monthly

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visits of the customers viz. Frequency, time spent on each visit. And purchases made during
each visit. If the manager has a strong intuition that total purchase is linked to frequency of
visit, then this situation can be modeled by regression. This model can then be used to predict
future purchases of a customer. Regression needs sufficient amount of data to be reliable and
valid.

Link Analysis
Link Analysis seeks to establish relationship between items or variables in a database record
to expose patterns and trends. Link analysis can also trace connections between items of
record over time. The most important link analysis application in CRM, called market basket
analysis, is an operation that seeks relationship between product items characterizing product
affinities or buyer preferences. The retail store collects thousands of interactions daily. A link
analysis task performed on this data will point to items that are bought together e.g. bread and
butter are bought together rather than bread and orange juice. Such information can be used
to design store layouts, design coupons, etc.

Segmentation
Segmentation aims to identify a finite set of naturally occurring clusters or categories to
describe data.

Deviation Detection
Deviation Detection (DD) focuses on discovering the most significant changes in the data
from previously measured, expected or normative values. Most CRM solutions have a DD
task running in parallel on a regular basis. Suppose a retailer finds out that the sales from a
particular section of the store have been much less than expected. This deviation on further
analysis points out to non-stocking of a popular brand.

Tools such as decision trees, rule induction, case based reasoning, visualization
techniques, nearest neighbor techniques, clustering algorithms, etc are used for the
above purposes.

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The Existing CRM Solutions
Delivering the ‘360 view’ requires automation to bring together all the data concerning a
customer. This implies the organization has to change from:
Mass Marketing Product Focus
Product Focus Customer Focus
Economies of Scale Economies of time
1 way communication Interactive
Response Time Real Time

Present CRM Alternatives

Present CRM solutions are offered by host of vendors that are to a great extent not industry
specific. While there are some vendors, who have come up with industry specific solutions,
the broad model around which the CRM solutions are built remain the same. Adopting a
similar or a look alike solution across industries is what causes major strain in servicing a
customer.

Typical offerings of the current CRM solutions (such as Siebel, Oracle Apps or MySap.com,
etc) vary from solution to solution. However typical CRM offerings consist of:

 Customer Development
 Field sales, Tele sales, Internet Sales
 Service Centre
 Call Centres, Field Service
 Sale management and support
 Internet Customer Service
 Market Analysis
 Service Interaction Centre
 Internet, Tele marketing
 Business Partner Collaboration
 Product and brand management

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The Customer focused organization: CRM Model
The idea here is to develop systems that allow flexibility, work on not completely predefined
processes so as to enable front office to be proactive to each customer needs

The Mindset impact on CRM

A typical data warehouse will have the following components:
 While developing a data warehouse one takes into account all the legacy and operation
systems. But typically sales teams could be managing leads on an excel worksheet.
Sometimes critical DSS input like “Profitability Analysis” itself may reside on a
worksheet.

Data
Warehouse

Legacy & Operation

Extract & Transfer

Risk Cube FP&A Mktg & Campaign Mgmt

Cube Sales Cube

OLAP Tool

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Thus a Data Warehouse solution must be able to accept information from such “unstructured”
sources as well as budget for an open architecture to enable plug-in for systems to be
developed in the future.

a) Generally the existing information is mapped into a data warehouse. Since a customer
centric info-base is being developed, it is critical that extensive customer research is done
to identify their information needs and thus what profile data will be relevant for us. Thus
any data-warehousing project needs to work closely with the research team.

b) After extracting the data from various systems, we need to scrub and clean the data, de-
duplicate.

c) Even though we may find 80% of the names in a database of a million customers using
combinations of let’s say a 1000 first and last names, to take into account all possible
combinations we may actually need a database of 10,000 first and last names. Even then
we may not be able to comprehensively cover all future combinations. Now, the system
must expect this kind of input on a regular basis rather than it happening by exception, as
is the case with updating “masters” in a traditional system.

d) Ad-hoc querying is a tool that is most often used in such applications. Unfortunately not
much effort is made to make this tool “end-user” friendly so that even a layman could run
his/her reports. Typically a data-warehouse and data mining person is placed in
information technology to manage all queries. With the advent of tools like MetaData
Repository, drill down OLAP tools and Palm Pilots it is now possible for hardcore
marketing and sales types to directly access and run their queries. Infact we need to
budget for training the sales and marketing team with the use of data-warehouse.

e) The real power of the CRM system is its ability to provide a rich, value added experience
to our customers at all touch points – call Centres, kiosks, retail outlets, mobile devices,
Internet and branches. Integration and information dissemination must happen at all these
points. Thus the CRM specialist in marketing must be well versed with all these tools and
techniques.

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eCRM
eCRM Vs CRM
In simplest terms eCRM provides companies with means
to conduct interactive, personalized and relevant CRM is essentially a
communications with customer across both electronic and business strategy for
traditional channels. It utilizes a complete view of the acquiring and
customer to make decisions about messaging, offers and maintaining the “right”
channel delivery. It synchronizes communication across customers over the long
otherwise disjoint-customer facing systems. It adheres to term. Within this
permission based practices, respecting individual’s framework, a number of
preferences regarding how and whether they wish to channels exist for
communicate with you and it focuses on understanding interacting with
how the economics of customer relationship affect the customers. One of these
business. channels is “electronic”
– and has been labeled
Why employ eCRM? “e-commerce” or “e-
Companies need to take firm initiatives on the eCRM business”. This
frontier to electronic channel does
 Optimize the value of interactive relationship not replace the sales

 Enable the business to extend its personalized force, the call Centre, or

reach even the fax. It is simply

 Company-ordinate marketing activities across all another extension, albeit

customer channels. a powerful new one, to

the customer. The thrust
 Leverage customer information for more effective
of eCRM is not what the
emarketing and ebusiness
organization is “doing
 Focus the business on improving customer
on the web” but how
relationship and earning a greater share of each
fully the organization
customer’s business through consistent
ties its on-line channel
measurement, assessment and “actionable”
back to its traditional
customer strategies.
channels, or customer
touch points.

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The six “E’s” of eCRM
1. Electronic channels
2. Enterprise
3. Empowerment
4. Economics
5. Evaluation
6. External Information

eCRM Architecture
The primary inputs to this module are mainly from the eCRM Assessment and strategy
alignment modules. During this stage the company will try and develop a Connected
Enterprise Architecture (CEA) within the context of the company’s own CRM strategy. The
following is a set of technical eCRM capabilities and applications that collectively and
ideally comprise a full eCRM solution:
 Customer Analytical Software
 Data mining software
 Campaign Management software
 Business Simulation
 A real time decision engine

Review and Assessment of CRM solutions

CRM software applications embody best practices and employs advanced technologies to
help organizations achieve these goals.

Categories of CRM solutions

Any enterprise, which wants to implement CRM solutions, can choose from four categories
of solutions
 Integrated applications suite
 Interfaced applications bundle
 Interfaced best of breed solutions
 Best of cluster

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Selecting an interfaced best of breed approach for pure functionality or a front office
application suite solely for integration limits enterprise choices. Enterprises need to start with
a clear picture of the basic truths of integration, interfacing and functionality. An integrated
application suite is a set of application that employs a common architecture, referencing a
common logical database with a single schema. Some suites are more often interfaced
application bundle i.e. a set of interfaced application from a single vendor containing more
than one technical architecture or more than one logical database- frequently assembled by
the vendor through the process of acquisition or partnership.

An alternative approach to suites is an interfaced best of breed solution – an approach

whereby an enterprise selects from multiple vendors a set of applications that must be
interfaced to work together, either by the enterprise, one of the selected vendors or a third
party integrator. The individual applications are not the best in any objective sense. Rather,
some enterprises select the applications because they best meet the particular needs. The
challenge of this approach is that, in some cases, the enterprise fails to complete the
necessary interfaces to get the individual applications working together; consequently, the
applications remain stove pipes. Best of cluster is similar to best of breed except that here
best is chosen from the cluster and they are interfaced.

Key requirements for CRM solutions

Some of the functional and technical requirements for CRM solutions are as listed below:
 Business intelligence and analytical capabilities
 Unified channels of customer interactions
 Support for web based functionality
 Centralized repository for customer information
 Integrated work flow
 Integration with ERP applications

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Functional Components of CRM solution
CRM applications are a convergence of functional components, advanced technologies and
channels. Functional components and channels are described below:

SALES APPLICATIONS

Common applications include calendar and scheduling, contact and account

management; compensation; opportunity and pipeline management; sales forecasting;
proposal generation and management; pricing; territory assignment and management;
and expense reporting

MARKETING APPLICATIONS

These include web based and traditional marketing campaign planning, execution, and
analysis; list generation and management; budgeting and forecasting; collateral
generation and marketing materials management.

CUSTOMER SERVICE AND SUPPORT

APPLICATIONS

These include customer care; incident, defect and order tracking; field service; problem
and solution database; repair scheduling and dispatching; service agreements and
contracts; and service request management.

Given below is a brief review of what some of the known vendors in this area have in their
applications for these verticals. The table 2 at the end gives comparative assessment of the
products discussed below for the above verticals:

 SIEBEL
It continues to out market and out sell the competition. It is one of the few front office suite
vendors having vertical specific functions. Its functionality is compelling. It can be integrated
with most of the back office solution like SAP and Oracle. It has solutions for automotive,
public sector (US), communications, consumer goods, apparel and footwear, energy, finance,
insurance, health care, life sciences and high technology industry sectors.

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The solutions for the verticals described above are discussed below:
 For Consumer goods: a Siebel eConsumer goods offers eBusiness solution spanning
the entire demand chain from the end consumer, through the retailer and the
wholesaler, to the manufacturer. It has robust trade promotions planning functionality
allowing users to manage customer promotion plans and the funds to support them,
while comprehensive route planning functionality enables integrated account
targeting. Using Siebel eConsumer Goods, organizations can also identify customer-
buying behaviors and translate this understanding into new trade promotions and
product offerings
 For Financial Services: Siebel eFinance enables banking, brokerage, insurance, and
capital market organizations to establish and maintain long term profitable
relationship with consumers, small businesses, and corporate customers. The
organizations can capitalize on information captured during each customer interaction
to more effectively cross-sell and up-sell additional products and services.
Additionally, Siebel eFinance provides a comprehensive view of the entire customer
relationship across multiple product lines, enabling financial service organizations to
provide a personalized experience across all channels.
 For Healthcare: Siebel eHealthcare gives organizations the ability to streamline and
improve sales, member services, medical management, and network management
services. By using multiple distribution channels, including the Internet, call Centres,
home office staff and independent brokers, Siebel eHealthcare provides organizations
with a single view of their customers, thereby ensuring better service and improved
quality of care.
 For telecom service providers: Siebel eCommunications helps wireless, cable, and
Internet service providers to target and win the right customers, accelerate service
delivery, and provide service across all touchpoints. Siebel eCommunications
embodies the industry’s best practices for generating accurate service orders,
managing billing inquiries and adjustments, and up-selling and cross-selling
additional services. By using Siebel eCommunications’ integration technology,
service representatives and salespeople can instantly access information such as
billing, order management, and network management from Operation Support
Systems (OSS), to deliver highly responsive customer support and significantly
increase sales.

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Siebel 99, the vendor's major release, boasts 117 applications that span sales and service and
incorporate multiple vertical markets.

A major effort in the new application release is it integrates all the channels companies use to
contact customers: Web, E-mail, voice, wireless and face-to-face contact.

Some of Siebel employee- Some of Siebel customer- Some of the additional products
facing applications are: facing applications are: available in version 6.0
Siebel eBusiness Connector for SAP
Siebel Call Center Siebel eChannel
R/3 ®
Siebel eMail Response Siebel eCustomer Siebel Communications Server
Siebel Field Service Siebel eMarketing Siebel Distance Learning
Siebel Marketing Siebel eSales Siebel Global Enterprise Support
Siebel Sales Siebel eService Siebel Language Extensions
Siebel Service Siebel Wireless

 Clarify
It offers customer service & support and field service suite; however its sales functionality is
immature.

 Oracle
Oracle is betting everything on its thin, Web Based, centralized computing model. The
Internet computing architecture is compelling for connected non-mobile users; Oracle is
rebuilding functionality on the new platform and integrates its various acquired products. It
offers a broad set of functionality across e-commerce, front office and business intelligence
applications.

 Vantive
Vantive offers a compelling customer service and support and field service suite. The rest of
its front office functionality makes it suite more of a bundle. The solution is integrated with
PeopleSoft at the back office.

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Table 2 Comparative Assessment of CRM Products for Vertical Specific Requirements

CRM Application Siebel Clarify Oracle Vantive

Requirement
Consumer Products
Category Management Available Available Available Available
Promotion Management Available Available Available Available
Demand Planning Available N.A. Available N.A.
Interactive Selling Available Available Available Available

Telecom Service Providers

Blended Sales & service contact Available Available Available Available
Centre
Competitive Pricing Analysis N.A. N.A. N.A. N.A.
Integration with Billing System Available Available Available N.A.
Churn management Available Available Available N.A.

Commercial Banking
Contact Centre Available Available Available Available
Profitability Analysis Available Available Available Available
Integrated Targeting N.A. N.A. Available N.A.
Marketing Data mining N.A. N.A. Available N.A.

Pharma & Healthcare

Contract Management Available N.A. Available N.A.
Marketing Analysis N.A. Available N.A. N.A.
Disease Education System Available N.A. N.A. N.A.
Knowledge Management System Available Available N.A. Available

● ● ●

Some Indian CRM solutions are by Sales Logix, Logix Microsystems, Sonata Software,
Oracle India, L&T information technology, etc.

Other CRM solutions are Aurum, Epiphany, Avyaya and Onyx.

● ● ●

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Some frequent modules of CRM
 Forecast Management
 Encyclopedia Management
 Campaign Management
 Brand Management
 Opportunity Management
 Event Management

CRM solutions are inter-wined combinations of technology and business

processes. In order to be effective CRM service providers will need a
balanced understanding of both products and services. It’s necessary to have
an expertise in not CRM technology but also customer service processes.

The potential use of CRM lies in it being the leading indicator of future
revenue than just being used as a customer facing transaction-processing
tool or as a lagging indicator communicating past consumer grievances.

The complete concept of CRM can be mapped on a technology solution as

per the following blue print. The databases feed the technology
infrastructure which links YOU with the customer touch points.

Thus we have four components of a CRM initiative rollout

 Customer Value Management Strategy
 CRM roadmap keeping in mind industry nuances
 Database solutions
 Customer access channels

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 CASE STUDY 1: Implementing a Technology
Based CRM Solution
~ THE ICICI Experience

ICICI set up as Development Bank over four decades ago to provide products and services
for the corporate segment, diversified into the retail segment of the financial markets in the
early 1990s.

In 1994, it established ICICI bank as a commercial bank that is flexible, innovative and
prompts in meeting customer requirements. In addition to the bank, the retail initiatives
include Prudential ICICI AMC, ICICI Personal Financial Services, ICICI Capital Services,
and ICICI web trade, Prudential ICICI Life Insurance, ICICI Lombard General insurance.
This apart the retail initiatives also include a plethora of web based businesses including city
portals and various other utility sites such as billjunction.com, icicimoneymanager.com, and
magiccart.com, among others.

The Retail Strategy

As part of plans, it is implementing various projects to establish world class CRM practices,
which would provide an integrated view of its customers to everyone in the organization.
CRM at ICICI involves increased communication between the virtual universal bank and its
customers and prospects, as well as within the group itself. The underlying idea is to enhance
every instance of contact with the customer. ICICI believes that a true customer centric
relationship can only be accomplished by considering the unique perspectives of every single
customer of the organization. Hence the pressing need to put in place a technology enabled
CRM solution.

The CRM Roadmap

CRM, at ICICI, is viewed as a discipline as well as a set of discrete software technologies,
which will focus on automating and improving the business processes associated with the
customer – face –to-face, call Centre, ATM, web, telephone, kiosk, bank branch, sales
associates, etc – so as to allow ICICI to carry out cradle-to-grave customer management more

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 efficiently. It should allow ICICI to engage in one-to-one marketing by tracking complete
customer life-cycle history. To begin with it will automate process-flow tracking in the
product sales process, and be able to generate customized reports and promote cross selling.
It will also enable efficient campaign management by providing a software interface for
definition, tracking, execution, and analysis of campaigns. From an architecture perspective,
the enterprise-wide CRM solution should seamlessly integrate non-transactional related
customer information housed in the front-office with the transactional information housed in
the back office.

Implementing CRM
A very detailed and comprehensive CRM action plan was developed based on the
understanding that CRM will require enterprise wide transformation.

The CRM Business Transformation Map below shows the various aspects of that change.

BUSINESS FOCUS

Product Sales Channel Marketing Service Customer

ORGANISATIONAL STRUCTURE
Product Place Promotion Channel Contact Customer
Management Management Management Management Management Management

BUSINESS METRICS Customer

Product Place Program Customer Customer Lifetime
Performance Performance Performance Revenues Patterns & Value and
Profitability Loyalty

MARKETING FOCUS
Segment
Mass Sales Marketing Integrated Marketing
Specific CRM
Advertising Promotion Campaigns Communications
Marketing

TECHNOLOGY
Transaction Data Data Customer
Maintenance
Data Warehouse Data Marts
Processing Access Touch-point
Systems

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Source: “How to Get There From Here” by Melinda Nykamp, President, Nykamp Consulting group
Interviews with key individuals throughout the organization helped identify different
initiatives that have been launched, all focused on CRM.
The next step in the planning process was a Gap Analysis. This analysis essentially compared
current stage against optimal relative to the five aspects of business, to identify and
specifically describe the gaps.

The CRM Business Cycle:

 Understand and Differentiate
Organizations cannot have a relationship with the customer unless they understand
them… what they value, what types of services are important to them, how and when
they like to interact, and what they want to buy. True understanding is based on a
combination of detailed analysis and interaction. ICICI group’s customers need to see
that the company is differentiating service and communication based on both what they
have learned independently and on what the customer has told them. At the same time,
differentiation should be based on the value customer are expected to deliver.

 Develop and Customize

ICICI believes that the extent of customization should be based on the potential value
delivered by the customer segment.

 Interact and Deliver

ICICI is strongly of the opinion that value is not just based on the price of the product or
the discounts offered. In fact, customer perceptions of value are based on a number of
factors including the quality of products and service, convenience, speed, ease of use,
responsiveness, and service excellence.

 Acquire and Retain

The more ICICI learns about customers, the easier it is to pinpoint those that are
producing the greatest value for the organization. Successful customer retention
basically involves getting it “right” on an ongoing basis. And that is exactly what ICICI
group aims to achieve out of its CRM initiatives.

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Successful customer retention is based very simply on the organization’s ability to constantly
deliver on three principles:
 Maintain interaction; never stop listening to customers
 Deliver on customer’s value definition. Remember that customers change as they
move through differing life stages; be alert for the changes and be prepared to modify
the service and value proposition as they change.

 Prioritizing Changes
Because there might be many gaps, therefore many changes that an organization will need to
make, prioritization was critical. The evaluation of each of the strategies identified to resolve
the gaps at ICICI were based on:
 Cost to implement – including initial onetime costs, as well as anticipated ongoing
expenses.
 Overall benefit – some changes may have higher impacts on an organization’s ability
to increase customer value and loyalty.
 Feasibility – based on the organization readiness, data and systems support, resource
skill sets and a number of other factors.
 Time Required – including the time necessary for training and addressing “cultural”
change management issues related to a specific strategy

 Creating an Action Plan

The next step in the planning process was the development of a very detailed action plan.
While the complete plan might span three or more years, it was based on three-month
phases with clear deliverables that will demonstrate both progress and quick hits or
measures of success. The plan identified interdependent activities and should
comprehensively detail the time and resources required for each activity.

Another key factor for the planning process was the Leadership Action Plan. Advancing
on the CRM transformation map required significant organization change. This part of the
action plan helped assess the drivers and restraints of change and the organization’s
readiness to assess the change.

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Selecting and Implementing a Technology Based Solution
Technology
The success of the CRM initiatives was contingent on various decisions pertaining to
technology. Some of the key issues were: -
(a) Make or Buy: - The decision to buy was based on an evaluation of an identified
set of criteria. Some criteria were Functionality, Flexibility, Scalability, Fit with
existing architecture, etc. was decided to purchase an off-the-shelf CRM solution
and customize it to suit ICICI’s requirements.
(b) From whom to buy: Some Criteria included were CRM expertise, Retail Finance
Experience, Credentials including financials, client list, life history, etc. A detailed
Request for Information (RFI) was sent to each of the shortlisted companies. After
receiving the RFIs, another round of evaluation was done. After short listing two
product vendors and system integrators, reference calls were made to several of
the past clients of all shortlisted companies.

Processes
All processes were mapped on to product by understanding the details. During the course
of the process mapping, several opportunities for improvement were identified and
implemented.

The Sales Process – Pre CRM and Post Implementation of CRM

Independent Databases

Call Centre Sales Agent Scrutiny Credit Agent Operations

Database

Call Centre Sales Agent Scrutiny Credit Agent Operations

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Lessons so far from the ICICI experience
If CRM involves optimizing product, price, place of distribution, promotion,
sales and service, why are so many companies struggling? Hasn’t anyone really
mastered the art and science of CRM, and if not, why is it so difficult?
CRM is difficult because it is an enterprise wide initiative.
 CRM is not a technology initiative. Many have confused CRM as a
technology initiative, and assigned the CRM implementation project to their
information system or information technology group. CRM conferences
often equate to technology exhibits and demonstrations. Technology is
needed in order to implement CRM – particularly the customization part –
but technology is not the driver of CRM, or the solution to successful CRM
implementation.
 CRM is not exclusively a marketing initiative. Many organization have
merely equated CRM with customer focused marketing, or
data-driven/database marketing. CRM results in more effective, data driven
marketing efforts; CRM requires marketing experience. But CRM is strictly
not a marketing initiative.
 CRM is not exclusively a sales initiative. Similar to marketing, CRM is often
lodged within the sales department. The sales-force, after all, is extremely
close to their customers…understanding their needs and wants., and trying to
fulfill them. Sales, however, is just one functional area that can benefit from
CRM, and that is necessary for effective CRM.
 CRM is not exclusively a service initiative. As with sales and marketing,
customer service is one functional aspect of successful CRM
implementation. But customer service is not the sole driver of the process.
 CRM involves marketing, sales, service, and technology, as well as the other
inner workings of the organization. Having even one “broken spoke in the
wheel”. one area of the organization that is less than committed to CRM …

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 CASE STUDY 2: Building Relationship with
Doctors for Effective Management
~ THE CASE OF THE PHARMACEUTICAL
INDUSTRY

Introduction
The Indian Pharmaceutical market is worth approx. Rs. 140000 million growing at a healthy
10%. There are around 16,000 players both in the organized and the unorganized market
vying for a piece of this pie. It is a very fragmented market with the number one player,
Glaxo Wellcome, having a market share of 5.8%. Infact the combined of the top 5
companies does not exceed 20%. Earlier MNC’s used to sell on the quality plank but today
quality is a table stake condition where even the smallest player is able to meet the highest
quality norms.

Doctor Population
There are approximately 500,000 doctors in India who are registered with the Indian Medical
Association. The largest of the pharmaceutical companies cannot meet more than 125,000 of
this doctor population. As a result most of the doctors are being met by at least 60-100
companies.
Out of the total doctor population as much as 60-65% are general practitioners within the
basic MBBS degree. The higher specialties constitute the remaining 35-40%.

Promotion
In an ethical market product promotion is directed solely to the qualified directors. No
advertising mentioning the brand names is allowed in the lay press. The medical
representative (MR) is the major means of promotion though other media like direct mail,
journal advertising, conferences, also play a role albeit a limited one.

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Starting a CRM initiative
Having understood the major characteristics of the industry, the identification, differentiation,
interaction and customization (IDIC), model as suggested by Don Peppers and Martha
Rogers would be used to understand the steps to a CRM initiative.

Identification: The first step towards any CRM initiative is identification of the customer.
Each medical representative maintains a list of doctors in his area. This list is generated
through interviews with stockiest, retailers, as well as his peers from other companies. The
list called the MSL (must see list), MVL (Must Visit List), Customer list, etc typically lists
the name, address, telephone no., specialty, qualification, visit timings, and other basic data
of the doctor. The key driver for a CRM program is integration of this data from all the MRs
to a central database.

The next step is to add to this data by collecting details from other sources like
 Membership directories of association: Almost all cities have their branches of the
Indian Medical Association’s (IMA). These have a directory of all their members listing
their contact details and some personal information. These are a good source to begin
with but most are updated at very long intervals and hence the veracity of the data has to
be checked. Similarly, there are individual associations for almost all the specialties
whose membership directories are also easily available.
 List of conference participants: each specialty of doctor organizes a national level
conference every year where members from all over the country attend. Details can be
collected through the sponsorship of the front-desk; organizing contests, or distributing
give always in exchange for information.
 Doctors Referral: Another route would be akin to a member get member scheme wherein
doctors would be encouraged to refer follow practitioners.

Thus a semblance of a database would take shape. The term is a misnomer, since at best it is
a customer list, as it contains nothing more than contact information along with some basic
information. But nevertheless it is a starting point. The database at no stage can be termed as
final as collection of doctor details is an ongoing process. Continuous additions, updations
and deletions are always taking place.

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The list cam be mined for details of specialty wise break-up, geographical coverage etc, to
serve as a tool for the marketing decision making process.

Differentiation
The success of any loyalty program lies in differentiating the key customers. Typically, a
MSR would classify his doctors using the ABC Method as core, important and others based
on the amount of business he gets.(or expects to get) from them. The number of sub-classes
would vary but the principle would be the same. In a typical pyramidal fashion the top-rung
doctors who are the least in number would be commercially most important and the
importance would linearly decrease as one goes down the pyramid. The numbers would
proportionately increase as per the Pareto principle.

The point to be borne in mind is that the whole basis of differentiation is being done on very
subjective terms of the perception of the local MR unlike other industries viz. Airlines, who
would classify frequent fliers based on data collected from reservation. Since there is no
formal mechanism of capturing data about the revenue generated from a doctor, the MR is the
sole and final judge.

Thus the database formed is step one, can be now classified into the important doctors and
the not so important ones.

Interaction
Now comes the stage of building on the database collected and refined in the above 2 stages.
The basic idea now is to build on the data collected in the first stage. The idea is get to know
the doctor intimately. His hobbies, likes, dislike, family details, etc. The fundamental premise
being that the doctor is as human as anybody else is and hence we should recognize his
individuality. It is of utmost important that it is decided beforehand what kind of information
would be collected and much more importantly how it will be used.
Interaction can be done at two levels:
 Firstly, personally at the MR level: the most productive would be using human
intervention. The MR can easily collect most of the information from his day to day
interaction with his customers. Alternatively a formal structured questionnaire can also be
administered.

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The biggest hurdle to this approach is not surprisingly enough the MR. A level of conviction
has to e brought into him that the data he would collect would actually be used and more
importantly will help him do his job better. Numerous instances abound of companies who
have gone about collecting loads of information on their doctors through their MRs and
finally not using them at all.

 Secondly. Direct at the corporate level. : The structured questionnaires requesting further
details can also be mailed to doctors with each response entitled to a token gift, etc. This
approach typically would yield a lower rate of return but the quality of information would
be superior to the first approach as it is coming directly from the doctor. The information
collected is then incorporated to the basic database earlier formed. Just to give an idea of
the type of information collected by companies consider the following:
 Personal information : date of birth, marriage anniversary, details of children,
qualification and experience, etc
 Hobbies and Interests: Activities during spare time, TV channels watched, general
interest, magazines read, favorite vacation destinations, etc
 Professional Interests: Type and name of medical journals read, professional
membership of associations, attendance at national conferences, etc
 Ownership Details: Household durables owned, vehicle ownership, etc
 Companies have been able to collect enormous amount of such data, through
either of the means elaborated earlier. What is important to note that they have
been able to demonstrate their sincerity in actually using this data.

Customization
This is the time to start using the data. The easiest and the most preliminary step is to start
greeting the doctor on his birthday and marriage anniversary. From a simple card personally
signed to a personal phone call from the head office anywhere in the country to a birthday
cake being actually presented are some of the ideas. Even bouquets can be delivered at the
doorstep. A company even arranges for the doctor to have dinner with spouse on their
marriage anniversary, with the tab taken care of course!

But more important to customize the interaction with the doctor based on the data we have
on him. Gifts based on the interests and hobbies can be presented. If a doctor has expressed

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interest in national conferences of his specialty the same can be arranged.

The success of the whole programme hinges on how well can the companies pass on the data
of the doctor to their field force and train them on how to use this data. He is actually the man
of the moment. It is necessary that the information received on an interaction be fed into the
system so that it can be used for the next interaction. A sort of ‘master-database’ can be
generated which would recover every contact with a doctor through the field, mail, telephone,
web, etc. this master database would be the key driver to foster a learning relationship.

Loyalty programme
The next obvious step is to have a loyalty programme as a frequency marketing initiative. An
ideal loyalty programme would be able to identify its key accounts, reward them for their
custom and encourage them to increase their spend.

This concept in case of the pharmaceutical industry has a twist since the customer (the
doctor) is not the actual consumer (the patient) of the product. Thus there are ethical issues
involved in rewarding points in return for prescriptions. One cannot have a reward
programme based on the redemption of these points.

One approach would be to set the whole programme based on the classification into which
the doctor falls. Thus the lowest rung would be restricted to the basic of activities. The
number and the level of activities would increase as the important of the doctor grows. A
branded programme can be started for the most important doctors. It is important that it is
clearly defined at the onset what will be the objective of the programme and more
importantly convey the exclusivity of the programme. The doctor has to be made to realize
that he is the ‘chosen one’. All activities and inputs should only reinforce this
communication.

The success of such a programme hinges on making the doctor covet the membership to the
programme. Thus a continuous monitoring is required of the returns generated from the
doctor. If they fall below a predefined limit then the doctor can be downgraded and his
privileges reduces.
Direct Marketing

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It is a valuable tool for effective CRM. Since a captive database has been put into place it can
easily lend itself to direct marketing initiatives. As the primary fields captured are the contact
address a program through mail is easiest to accomplish. Brand awareness mailers, new
launches, contests all can be conducted by mail. Information technology has several
advantages
 It is very cost effective: A large audience can be touched at a relatively cheaper cost as
compared to personal selling.
 It can be targeted and specific to the right target audience in term of specialization or
geographical area.
 It is measurable with use of reply devices one can immediately gauge the efficacy of a
campaign. In fact since the target audience for a brand is usually sharply defined in terms
of their specialization e.g. An allergy product to ENTs, Dermatologists and GPs, the
response received is usually much higher than that accepted as a norm in other industries.
A response of 15-20% can be easily achieved through such communications.

Most of the pharmaceutical companies have realized the advantages of this mode of
communication. The primary rationale is to save the time of the field by promoting the low
involvement (for the doctor) products, promote brand recall for a new product, exploit
alternative avenues for brand promotion etc.

Apart from mail other DM media like telemarketing and web have also been tried. While
telemarketing has been tried for promoting new launches to get instant feedbacks the web has
still to achieve its potential. The PC penetration in India is still very low which handicaps the
growth of this mode. Using the e-mail to correspond and interact with doctors is being tried.
It is especially useful for targeting higher specialties, which is more technology savvy and
information hungry.

Call Centre
In case of chronic therapies like hypertension, serious conditions like AIDS and in hitherto
unknown conditions (at least in India) like erectile dysfunction the call centre provides the
answer.

The medium lends an ear to three types of customers

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1. Doctors, who would like to more about the drug profile, discuss a specific case, ask for a
reference on use in a specific condition.
2. Patients who seek counseling, the nearest physician or chemist shop. The telephone
provides anonymity to the caller especially when discussing taboo subjects
3. Retailers asking for pricing details, product availability

With the advent of paging companies who can provide a single number nationwide, facility
of leased lines from DOT and the toll free numbers in select metros this medium is set for
take-off.

There are certain factors to be borne in mind whilst setting up a call centre. The sheer
diversity of the country means that callers would speak different languages and may not be
comfortable with English. This is especially relevant if the centre would cater to calls from
patients. Also doctors would not prefer their queries being answered by a lay person without
any medical knowledge. Thus most medical queries have to be escalated to a qualified
physician who responds to a doctor’s queries within a set time limit. These limitations
notwithstanding, the call centre is an excellent medium to come closer to the customer and
pharmaceutical industry is realizing the potential.

Measurement Systems
The measurement system would require studying the prescription profile of the doctors who
are being exposed to the CRM programme vis a vis a control sample who are met by the field
force but not exposed to CRM activities. The prescription given by the doctors can be studied
over a particular time frame and the amount of prescriptions before exposure to the
programme can be measured. The idea is to check if the prescription levels have increased
after the doctor has been made the member of the loyalty programme. This method would at
best provide a qualitative idea but would nevertheless give an idea of the success or failure of
the programme.

Conclusion
The importance of internally marketing the CRM programme is very important. The success
of the whole programme hinges on the support of the top management who can act as a
mentor. The programme takes time to take off and much more time to actually show results.

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 CASE STUDY 3: Relationship Building in
Cement Industry
~ THE CASE OF INDIAN RAYON

Indian Rayon an Aditya Birla group company was one of the first cement companies
which felt the need to gain this immediate distinguishing factor and further long run equity by
using CRM as a strategy.

The company wanted to bring about a transformation in the way in which it interfaced with
its customers. Dealers being the interface with the customers were identified as one of the
major areas in this direction.

The company consciously worked on the aspect of maintaining long term relationship with its
set of customers and came out with the conclusion that if the user-customer can build long-
term relationship with the distribution channel (and thus the company) of Indian rayon
cement Products, this will be a major gain in the overall strategic marketing objectives of the
company and also it will provide the company a distinct positioning.

Indian Rayon decided to upgrade select dealers to become Birla Super Shoppes. The intention
was also to make the retailer go beyond being a mere sales channel. The Birla Shoppes were
geared to become Centres for what the company prefers to call “ technomarketing service”
and relationship outlets focused at maintaining long term relationship with its customers,
which no other competitor can offer.

The idea of building relationship with the customers through this unique route came after
studying the buying behaviors of customer more closely. For one, the customer base was not
homogenous – there were different categories of cement buyers in the market; the mason, the
civil engineer, the architect, the contractor, and the institutional or large scale buyer along
with the end user.

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While each of its customer has some degree of knowledge and practical experience of the
products quality and usage, there was a latent need for technical information and advice
before purchase. In most cases this need was never addressed, simply because the dealer
himself did not know much. At the same time most dealers tended to stock multiple brands
were more concerned with pushing their stock then spending time explaining the exact details
of any brand.

Each of these Shoppes had a qualified civil engineer that offered free technical consultation
to every customer. Customers were provided with comprehensive information right from
manufacturing of cement to its application in various end purposes. Based on the type of
construction,, the right type of cement along with the free advice on the usage of cement and
other additives and building materials. To further consolidate customer relationship each
Shoppe a regular “Mason Meet” where the actual users are invited and given technical and
practical knowledge and solutions. Besides the Shoppe owners of a particular area also get
together, once a week on an average for market and technical information sharing.

Here the differences are ironed out and collective strategies shaped. The company
involvement manifests through the regular seminars and training programs that are organized
for the Shoppe personnel.

Indian rayon has been successful in achieving results on twin fronts of CRM:
a) Consolidating Relationships with the customers through the unique distribution channel
route.
b) The company has also been able to strengthen bonds with its distribution channel(who is
also amongst the company’s customer groups)

Conclusion
To conclude, CRM in cement industry although in a very nascent stage has strong strategic
connotations. CRM is a strategy towards the marketers’ objective of providing value to its
customers. This value when translated is able to provide a distinct equity to the cement
marketers to stand apart and gain an edge in the clutter of intense competition, and relatively
undifferentiated products – which is peculiar to the cement industry.

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 CHAPTER 4:
ORGANIZING FOR ‘CRM’

Assessing Need

How do you know your business requires CRM?

It is very easy for a business to get caught in the latest ‘customer trap’ when it is being driven
by the information technology (IT) market. Every business does require CRM; the question is
to what level?

Trends
Many businesses are pushed by the current trend to change their business strategy, especially
around CRM. There are basically three trends that effect a business:

Consumer
The customer is an ever-changing image, to be really successful with CRM you must
recognize the customer trends that are effecting the business.
If a business does not understand a customer profile and the changes that have occurred then
it is not possible to provide true customer relationship management.

Products
It is the business providing the products that meet the changing customer trends. Products
need to be reviewed constantly perhaps enhanced or even removed. Supermarkets are a
perfect profile to look at for viewing ‘product trends’, they constantly add and remove
products and they constantly view customer buying profiles and set out the pattern of the
store to meet the strongest buying trend. This may not always be by using the latest
‘technology’, it could be by just reviewing shells at the end of the day, but the super market is
at the minimum watching for the two basic trends in CRM.

Technology
Ensure that the business is ready to install the new technologies, is the customer data upto it,
or is it time to start again? Do you need to review every technology being used or just one
area. Will it assist the business, is it going to grow with the business requirements or is the

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technology just another ‘trend’? Relationship management should not be an alternative to
existing functions/technology; it could be a logical extension to enhance those in existence,
though it could radically change some of the operational processes.

Is your Business ready? Are your customers Ready?

What are the costs, monetary, time, people and long-term issues?

Does CRM really matter?

Whatever the business activity is all companies have to ask themselves is CRM the real factor
for their company to succeed. Some customers do not need long-term relationship with their
suppliers; therefore only minimal information is required from that customer. That however
is still a form of CRM. Other companies have high quality and high value customers that they
need to know information about, they need to provide exceptional service, the ‘pedigree’ of
CRM.

Whatever the business is, if it has customer it has to ask, does customer relationship
management matter? What does it man to them in business terms? At what cost? What is the
overall loss if not adhered to?

CRM: Yes it does really matter – the strategy needs to last, be constantly reviewed and
can evolve over time.

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 EMPLOYEE EMPOWERMENT AND CRM
~ The Case of Hewlett – Packard India

Relationship between Employee Satisfaction, Customer Satisfaction & Market Share

Productivity Satisfaction

With Manager

Market Customer Employee Job

Share Satisfaction Satisfaction Satisfaction
-ve
Cost Of Satisfaction with
-ve
Quality Right Skills

Market
Share

40%
ESS

CSS
35%

30%

25%
1990 91 92 93 94 95 96 97
CSS ESS Market Share

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Initiatives for Employee satisfaction
A demotivated, unenthusiastic and unhappy employee will never care for the customers. Also
organizations willing to spend money when they are doing well should spend on employees
more rather than less when things get bad. An employee satisfaction survey should be carried
out on a regular basis.

Hewlett Packard (HP) Case

HP sells its products through its channels. total numbers of customer calls logged in
Whenever the customer purchases a at HP are 21,000 out of which 4600 are
product, and there is an issue to be through web support, 1270 e-mails and
resolved, the point of contact is the front 15,000 telephone calls. They use
line team. It handles the usage-related, the automated call distribution software,
application related and the real product which also enables to track the particular
related issues. The backend team handles history of the customer. The service
the upgradation issues. The partners providers are assessed continuously. It is a
provide the hardware support. The sales challenge to motivate engineers who are
and services are provided by DPSP’s and the employees of the service providers and
the ASP’s only. Typically in a month, the are not HP employees.

The engineers/service providers’ performance is monitored on:

 Turnaround Time
 Number of parts requested per call
 (Multiple Part consumption)
 Closing the call
 Customer satisfaction
 Repair rate
 Effective handling of customer escalations

HP has allocated points for each of these parameters for partner performance measurement.
In case the partner performance falls below the desired level of points, then there would be
deduction in the reimbursements of that reseller. However if he exceeds the given point scale
then he qualifies for additional reimbursements which are offered as rewards.

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HP contacts all customers, who are not happy with the service, and through the partners it is
attempted that certain steps are taken so that the customer is happy. The training program for
the partner is also regularly revived.

There is also a Reward 1000 plus program where there are points awarded. There are points
for various aspects such as training, quiz bulletin, customer feedback, customer service, re-
repair rate. The top contributors among the resellers are identified and are sent for training or
entertainment apart from monetary incentives.

So at HP, there is synchronization of the employee satisfaction and customer satisfaction

process to ensure a higher market share.

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 CHAPTER 5: Future Concepts
CEM ~ CUSTOMER EXPERIENCE MANAGEMENT

Customer experience management (CEM) is "the process of strategically managing a

customer's entire experience with a product or a company"

Marketing research has shown that about 70 to 80% of all products are perceived as
commodities that are, seen as being more-or-less the same as competing products. This
makes marketing the product difficult. Marketers have taken various approaches to this
problem including: branding, product differentiation, market segmentation, and relationship
marketing.

Relationship marketing, (also called loyalty marketing) focuses on establishing and building a
long term relationship between a company and a customer. There are several approaches that
have been espoused including customer experience management, customer relationship
management, loyalty programs, and database marketing.

CEM's critique of traditional marketing

The development of customer experience management originally started with a critique of
three existing marketing concepts. It concluded that the following three concepts do not go
far enough:
 Marketing concept--Since the 1970s there has been a gradual shift from a product-,
technology-, and sales-focused orientation towards a customer- and market-oriented
approach by determining the wants and needs of customers and satisfying them more
efficiently or effectively as compared to competitors. However, the approach is still
mostly functional, with similarities and differences between competitors being
defined mostly by product features and customer benefits. In addition, the customer is
perceived as being rational, which is in most cases not the case, as e.g. Kahneman and
Tversky's Prospect theory has proven. Also, it is asserted that market research is
mostly analytical leaving little room for qualitative assessments of customer
relationships towards products, services, or brands. It is claimed (by Shultz) that
traditional marketing, in practice, takes an inside-out approach (starting with internal
variables like production capabilities and available capital then moving to external

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 variables like customer needs), rather than taking an outside-in approach as marketing
theory requires.
 Customer relationship management is claimed to be deficient because it primarily
consists of database and software programs used in call centers and thus, focuses too
much on quantitative data. By doing this, it is led by transactions rather than a desire
to build lasting relationships with customers.

 Customer satisfaction is an outcome-oriented attitude deriving from customers who

compare the performance or value of the product with their expectations of it. It is
claimed that the customer satisfaction approach depends too heavily on outcome
oriented measures like satisfaction and too superficially on direct experiential
measures. A customer is said to be satisfied when a product's performance is above
the customer's expectations. Thus, traditional customer satisfaction techniques are
deficient if they don't help firms to understand and manage customers' experiences,
experiences that lead to the following equation: good experience = satisfaction.

CEM recognizes, as does all of marketing since the early 1970s, that customers are a
company’s most valuable asset. What makes CEM different from traditional marketing is that
it claims that marketing theory has seldom been implemented adequately.

Although all marketing management and strategic management does all of these, CEM
supporters claim that they have a methodology that will yield better results. Being convinced
that the marketing concept is too product-centered, Customer relationship management too
focused on quantitative data, and customer satisfaction too functional, CEM looks for another
perspective on the relationship of a consumer with a product or service. And what's key? The
experience linked to it is the key. This enables companies to strategically manage a
customer's experience with a brand and by doing so, achieve a truly customer focused
management concept.

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The CEM Framework
Schmitt's book "Customer Experience Management" offers the following five step framework
that should help managers understand and manage the "customer experience":

Step 1: Analyzing the Experiential world of the customer

Analyze socio-cultural context of the customer (needs/wants/lifestyle)

Analyze business concept (requirements/solutions)

Step 2: Building the Experiential platform

Connection between strategy and implementation

Specifies the value that the customer can expect from the product.

Whereas steps 1 (Analysis) and 2 (Strategy) form the basis for CEM, steps 3, 4, and 5 are focusing
on Implementation.

Experiential features, product aesthetics, “look and feel”, e.g. logos

Step 3: Designing the Brand experience

All sorts of dynamic exchanges and contract points with customers

Intangible elements (i.e. value, attitude, behaviour)

Step 4: Structuring the Customer interface

Anything that improves end customers' personal lives and business

customers' working lives

Step 5: Engaging in Continuous Experiential innovation

And finally, to bring all pieces together, a holistic approach is required that provides a linkage
between the different steps and connects them with the organization.

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How Does CEM Technology Work?

CEM Technology captures customer experience information across all customer touch points
and feeds it back to the organization so that action can be taken to improve profitability. At
the beginning or end (or both) of an interaction, and within context, the customer is invited
(automatically or manually) to provide their perspective via four or five short questions. Done
properly, this process will result in better than 80% customer participation and have a
measurably positive effect on customers.

Whether phone, email or Web channels, the experience information is collected within
context of the interaction. The questions that are delivered to the customer are specific to that
interaction type; the people, products, and processes that were a part of the interaction; and
the customer. The questions are also conditional in nature and facilitate both quantitative as
well as qualitative experience information.

CEM Technology accesses existing CRM data, productivity metrics, and incorporates key
information related to customer behavior and profitability. Information such as retention
rates, average purchase amounts, store sales, complaint and resolution rates, customer
segments, etc. are all combined with customer experience information and analyzed/reported
in real-time. The strength of a CEM system is in its ability to continually align company
performance with customer needs and behaviors, enabling companies to make effective,
correct, and critical day-to-day adjustments in resource allocation and execution — as well as
enterprise-wide shifts in strategy.

Customer Experiences can be categorized into three unique states. The state of the customer
experience has implications on the type of information to communicate with and collect from
customers. The three states of Customer Experience are: Normal Experience, Critical
Experience, and Unique Experience.

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 Fig. Managing Customer Interaction

CEM Versus CRM

Managing customer experience is a subject of lip service at many companies; contact

centers learning that it's about more than efficiency.

Despite some confusion and marketing spin though, customer experience management
(CEM) is emerging as a way companies can look in their own back yards to leverage CRM
for qualitative as well as quantitative insight into interactions that improve opportunities for
customer loyalty and new sales.

CRM starts with vision and strategy. The next layer down is collaboration and valued
customer experience. You can't have CRM unless the organization works well together, and
you can't have CRM unless you create a great customer experience. So CEM is a part of
CRM, it's not separate and distinct.

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Caching the Experience

If you've ever heard a voice say, "This call be sent, or files can be listened to at their
may be monitored for quality assurance." owners' leisure.
you've been part of the CEM experience.
As it applies to the contact center, CEM is
about capturing (recording) interactions Toni Portmann is president of Spectrum
between agents and customers and Contact Services, a Texas-based outsource
applying business rules to them. service provider that manages one million
calls per month for large software firms
Initially, CEM was used as a coaching and and ISPs. Spectrum uses CEM technology
training tool, game film of how we did and from NICE Systems. While the contact
how we can improve. It's more multimedia center might deal in hundreds of products,
now. CEM is still important to trigger gap- a query lets managers tap a single point of
training or e-learning sessions for agents, interest and monitor the recorded calls.
though newer goals of up-selling, cross- Training and supervisory review of calls
selling and surveying are also at work. helps team leaders spot opportunities for
CEM solutions like Witness or NICE agents to use the inquiry to increase
integrate with CRM applications like loyalty. While some customers are
Siebel, or with case management products reluctant to be up-sold or surveyed,
like Remedy. Contact center agents listen indicating interest in another product or
to a call and appropriately enter keywords service. That means relationships should
like "cancellation" or a product name into be built on a proper foundation that brings
the CRM system; business rules trigger the the customer into the discussion. "He
CEM system to digitally record and file doesn't want to be polled every day, let's
the conversation for specific owners like start with listening. When he calls, he's the
product or marketing managers. Alerts can best consultant you can get and it's free."

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The Reluctant Customer and Self Service

Cost management benefits of CEM are Meanwhile, in the name of efficiency,

clear, but when customers call a contact companies are increasingly offering voice
center about a problem with a product or and Web self-service, which by definition
service, do they really want to be polled or involves no agent participation. This may
up-sold? It's funny, there are almost two be fine for checking a balance or buying a
major groups of people, one that doesn't book or plane ticket, but often enrages
mind being interviewed, and the other that customers faced with deeper service or
just wants to get off the phone. product needs.

Having figured out that CEM is a process BMW just started charging $5 to people
and not just technology, companies are who preferred to talk on the phone rather
doing a better job of fusing marketing than use self-service. Efficiency is a
automation with CEM. "Imagine if you strategy, but don't then expect the
called upset, and your problem was customer to pay a premium for your
resolved and now you are pleased, At that service. Efficiency equals customers
point, if a supervisor says, 'We really don't judging you on price and it will take you
want this to happen again, would you mind downhill. If customers escalate the
if we ask you a few questions?' they might problem, it just goes to the more expensive
get valuable information they'd never get contact center channel anyway.
from self-service."

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 CHAPTER 6:
CRM in Select Services

1. Taj Air Caterers & Singapore Airlines

Taj actively participates in product designs and influences service design, wherever
necessary. This has evolved after getting an insight into Singapore Airlines’ customer profile
and their needs. The product is designed to reflect their passengers’ preferences, which are
quite different in Delhi and Mumbai, and on different sectors ex-Mumbai. TAJ Chefs conduct
an annual workshop on Indian Cuisine for Singapore Airlines’ caterers worldwide. Taj staff
gets trained at Singapore Airlines’ catering subsidiary, SATS. Taj Caterers share a lot of
information and can access technology issues with Singapore Airlines.

2. Taj Air Caterers & GE Capital Services

There is e-mail connectivity between the service provider i.e. Taj and GE (for canteen and
food supply). Taj Customer Relations responds within a stipulated time frame directly to GE
employees and analyze their satisfaction. Also on cards is a ‘Fitness Program’ where Taj’s
experts will share information of food nutrition, exercise, etc with GE staff. Similarly, a
Loyalty Program is being designed wherein for purchases of snacks and confectionery, GE
employees can obtain attractive discounts at Taj outlets/hotels. With another company Taj is
involved in cafeteria design and selection of equipment.

3. Titan Watch Repair Services

What did Titan Do?

The Titan Signet CRM initiative was undertaken in May 1995 to provide that ‘extra’ touch to
its special customers at the exclusive World of Titan stores.
Its mission was to create a sense of belonging of the customer to the store and vice versa by:
 Building a special relationship with high life time value Titan customers
 Recognizing and rewarding his/her loyalty to Titan
 Providing a platform for direct feedback from these valued customers to the company

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Where?
It initially started in 6 showrooms in Bangalore. Today the Titan Signet has been extended to
102 World of Titan showrooms across 59 cities all over India

Behind The Scenes

While the program has taken customer bonding one step further in Titan, there are many
behind-the-scene activities that ensure that the program is run efficiently, effectively and with
the level of enthusiastic participation. These are:
 Showroom Personnel are trained not only in the operations of the program at the
showroom but also in the finer details of CRM.
 Enrolments in the program are tracked on a monthly basis for each showroom, along
with data on purchases made by Signet members who have returned to the showroom
to buy again.
 Signet operations form a part of the quarterly appraisal for their showrooms, thereby
ensuring that they earn more marks on their efficient and effective performance.
 A grievance redressal system is in place to ensure that our valued customers are
responded to within stipulated time frame.

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 CASE STUDY 5: Customer Relationship
Management
@ APTECH

The case of APTECH Ltd. deals with an organization in the intensely competitive
information technology education and software services industry. In such markets where
technology is changing by the minute, organizations take initiatives to obtain even the
slightest competitive edge. The company described in the case is in the process of
implementing a Customer Response System across its 1500 odd centres. The impact of such a
move is being felt on customer satisfaction ratings and the critical word of mouth that attracts
new inquiries. There are of course certain implementation issues to be tackled. In order to
evaluate the system implementation at test centres, and to work through the implementation
in the remaining centres. APTECH is considering some cultural and organizational issues
within the organization. Also, besides its relationships with customers, it is working on its
relationship with business partners and employees.

INTRODUCTION
Today, computers are not restricted to computer software field only, in fact they have become
a necessary part of every business industry. This has led to tremendous rise in the demand for
trained computer professionals. With the increasing focus on computer software development
by the Indian government and NASSCOM along with many software export houses, this
demand is bound to increase even further in the near future and in the years to come. The
Indian computer software industry itself has grown from a mere 0.3 billion ten years back to
70 billion today. The rapid growth of this industry has led to high growth in the computer
education and training business. Private institutes today produce about 65% of the software
professionals and remaining by government affiliated institutes. The growth in the demand in
future is expected to be spurred by the growth in the information technology sector both
domestic and international, which is growing by the rate of 30-40%. The demand for
computer software professionals has shown an increasing trend over the years. As a result of
this many entrepreneurs took to this opportunity and opened computer-training institutes.
Over the years these institutes have developed rapidly to become huge in terms of their

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spread and the number of students churned out. Notably among them are companies like
NIIT, APTECH, SSI, TULEC, BITS, IEC, LCC, SOL-STAR etc.
Structure of information technology Education Industry
The information technology education industry in India is estimated to be around 625 Crores.
Although there are many players, it is mainly dominated by NIIT and APTECH in the
organized sector. This sector is growing at the rate of 20%.

Others
30% Market Shares
NIIT
40%

APTECH
30%

NIIT APTECH Others

How did APTECH get into customer care?

Firstly, APTECH was in the knowledge management business. There was a need to be able to
practice what one preached. Secondly, there was the business imperative. The need to be at
the vanguard of the quality initiatives was recognized. There were already manual systems in
place, both formal and informal. Formal mechanisms included feedback forms, while
informal channels included faculty interaction and open houses. However, these contained an
element of subjectivity. If a student had a good rapport with the centre staff his/her feedback,
complaints, suggestions, and queries were paid cognizance. A need was felt for more
quantifiable metric. Students, being young, are wary of expressing their concerns. An element
of monotony had crept into the manual systems – students said what they were expected to
say. In the feedback forms emphasis was placed on the contents of the course.

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69 | P a g e
 CRM Road Map at APTECH
There are two units of CRM – CRS and product delivery. The plan is to have a web
CAS. Using CRS, a feedback is given on interface, so that users can access their
the Centre, Product, People, & Specific information on a limited basis. This will
Issues. R.O., Product Design, & General help to judge his/her current status and
Management for Monitoring Centre accordingly plan if any corrective action is
Performance, Improving or revamping the required. E-mail facility is already
product, making policy decisions, and for available for APTECH members, so that
Overall improvement in delivery process the they can consult the respective
using this feedback. Where policy Faculty/Centre Personnel in case any
decisions are taken, they affect CAS assistance is required for planning. It is
(Centre Automation System) and RAS also planned to use the available
(Regional Automation System) and information and extend the concept to a
changes are incorporated as necessary. call centre, so those inquiries can be
directed to the nearest point, as convenient
The 2nd unit CAS (Centre Automation to them. Company also plans to use the
System) is the database. Currently this database being built up for alumni, so that
database is used by Centre Personnel for it can give value added inputs on a time to
student tracking and by the R.O. for time basis, depending on their
monitoring centre performance in terms of requirements and current job profile.

Customer Response System (CRS)

CRS is a customer service solution and not a data crunching operation. It covers three locations:
centre, regional office, and head office. In the centres and the regional offices CRS consists of
Client Service Module, while in the head office it consists of Client Server as well as Knowledge
Management modules. There are multiple objectives of CRS:
 Provide sufficient information, through an easy to access interface, to the customer for judging
their current status and make a plan for the future based on the same
 Provide an interface for the customer to communicate his/her views on the service received by
them.
 Have a mechanism in place to capture warning signals at an early stage to enable proactive
preventive action.

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Technology behind CRS
The Client Server module has a back end developed in Oracle, and a front end developed in
Power-builder. The Knowledge Management module is developed in Lotus Notes. In each
centre CRS is linked to the Centre Automation System. In the regional office it is linked to
the regional automation system. The Client-Server module has various screens like review
categories/notifications – Exception, Today’s Feedback, Awaiting Rectification, Ratified and
Pending Closure.

A flow chart, indicating the mechanics of how the Client-Server module functions, is
shown in Exhibit 1.

New FEEDBACK by student

Exception
Today’s Feedback
Notification to SRO/CH
Awaiting Ratification
Ratified
Pending Closure
Actions/Investigation

Inform Student to ratify

Ratified Awaiting Over 15 days

Ratification

Pending
Closure
Close
Satisfied Ratified
Complaint

Closed

Exhibit 1: Flow Diagram of Client Service Module

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CRS Interface
At the centre level, students, student relationship officer (SRO) and administrators interface
with the system. Whereas, at the regional office level the Regional Head; Regional SRO and
the Administrator, interface with the system.

Features at the centre level – there is a complaint registering facility for students. The system
provides accessibility to all students. It enables ease of complaint retrieval by centre
management. Analysis report on the complaints can be generated. Also, exception reports can
be produced. There is a complaint closure facility. The student ratifies all complaints. The
student receives a complaint acknowledgement. A facility to send reminders/repeat a
complaint has been provided. The student receives intimation for ratification of redressed.
The SRO/Centre Head is notified of all complaints. There is facility to request for immediate
regional office/head office intervention by SRO/Centre Head. Dynamic querying on
complaint data can be done. A facility to query on complaint status and for forced closure of
feedback has been provided.

Features at the regional office level – Complaint entry by regional office personnel is
possible. The feature of automatic escalation of complaints has been provided. Analysis
reports across centres and analysis reports can be generated. The regional office has access to
complaint information from all centres, updated weekly. There is a facility to find out details
of complaints logged earlier by a student while receiving a complaint. Dynamic querying on
complaint data and query on complaint status are possible. Personnel at the regional office
level can participate in discussions to resolve complaints and be informed about action taken
at the head office. They also have access to knowledge repositories at head office.

CRS reports – The different reports generated by the CRS system are:
Complaint Category wise Frequency Analysis, Cycle Time for Redressal Analysis, Status
Report, Status Statistics, Complaint Details, Exception report, Complaint recurrence analysis,
and Root Cause Analysis

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Knowledge management module
The Knowledge management module can be viewed from two perspectives – User and
Knowledge administrator/integrator. The architecture of the Knowledge Management module
is shown in Exhibit 3. Mr. Jahangir Kazimi, Solution Architect of the Knowledge
Management Module says that from users, perspective it consists of six links:
 Discussion Group
 Knowledge Repository
 Latest Updates
 Best Practices
 FAQs

Exhibit 3 Architecture
Complaint Management System – KM Functional Architecture

Oracle Application

Authors/
Experts Contributors
Exception
Reports

Knowledge
Discussion Repository
Groups
Outcomes

Users

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 Discussion group: feedback is grouped by category, by centre, region, or author. It is
possible to trace the thread of a compliant. Where it originated, who responded first, next
and so on? The status of a feedback can be discerned. One of the options under discussion
group is Priority Issues - This contains complaints that are not resolved for a certain
number of days. Once a discussion is concluded more responses are not required.
 Knowledge Repository – Once a feedback is closed it may or may not be knowledge
enriching. If it is generally applicable it undergoes a process of cleansing and filtering and
is then stored in the Knowledge Repository. The default view is my view. This consists of
the tasks allotted to the user by the knowledge integrator. There is a blank format that the
user can fill in. the user can also initiate a request to the author. All documents go through
a two-stage validation process. Each document has to have an approver. The approved
document is then forwarded to the knowledge integrator for incorporation in the
Knowledge Repository.
 Latest Updates: Contains complaints by category e.g. by author. There are various ways
of presenting information.
 Best Practices: There are various document forms such as Best Practice, root cause, and
problem-solution.
 FAQ’s: Here are answers to frequently asked questions are stored.

Besides these five options there are search mechanisms. There are different search features.
One way is to search for a key word in the entire document. Another way is to search for
keywords assigned by the author.

The knowledge integrator validates the structure and the content of Best Practice, Root cause,
and Problem Solution documents. The knowledge integrator acts as a link between the
Knowledge management and the Client Server modules. The functions of the knowledge
integrator are twofold. First, he/she acts as a facilitator, ensuring that the right people interact
to find the correct solution. He/she acts as a moderator – closing, declaring and concluding
discussions. Second, the knowledge integrator drives what is happening in the forums.
Whether a feedback is knowledge enriching or not is not a black and white issue. Therefore,
there is the concept of a brewing tank. Knowledge is created, captured and stored. No
immediate decision is taken on putting it in the Knowledge Repository.

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Implementation Process
There are Faculty, Counselor, Administrative Staff and other category of members in a
centre. It was imperative that all members of the Centre were convinced about this
system. To achieve this an exhaustive session was conducted to all members of the
Centre covering the various aspects of the system and the advantages of the system.
The main challenge was to remove the phobia of COMPLAINT and replace this as a
suggestion for improvement. This cannot be achieved in one round of training. ,so at
least 2 to 3 rounds of training were conducted, which was reinforced by the top
management, whenever a communication took place. Once the centre staff was
convinced, and then the second step of introducing the system to the students was
undertaken.

The 2-step procedure:

(a) Publicize the existence of the system for the usage of the students. This was done:
(i) By putting up posters in the centre
(ii) Announcing in the classes by the faculty
(iii) Informing them during informal meeting by counselors, Centre Head, etc
(b) Encourage the students to use the system, by promptly attending to the feedbacks
received.

Since the CRS was coupled with CAS no additional infrastructural requirement was
there to implement CRS in the Centre. The whole process of implementation in the
Centre took roughly one calendar month time.

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Conclusion
The primary requirement for any system to get implemented successfully is the buy – in
process of the end user. The complete success depends upon how much the user is convinced
about the benefits of the system to be implemented. For CRS there are 3 users namely:
Student, Centre Head and Student Relation Officer.

Through word of mouth among the students the usage of CRS as a platform for
communicating the feedback to the centre is increasing on day-to-day basis. Since APTECH
is in the early stages of implementing CRS, the only two parameters currently that they are
looking at is the response time and the resolution time on a feedback. As the system matures,
two of the major metrics that will be looked at is product delivery and time for delivery.

The Customer’s viewpoint:

Few students of APTECH franchised centre where CRS had not yet been installed and few
students from a centre run directly by APTECH where CRS where CRS went online were
interviewed to understand its immediate impact. Students from the first type of centres were
highly dissatisfied because their basic expectations in terms of service and facilities were not
met, they didn’t know anything about CRS or any system by which they can give the
feedback on which some meaningful action can be taken. They were also not at all sure if the
franchised centre would act on the feedback. While students from APTECH run centres were
highly satisfied with the facilities, and services as they exceeded their expectations. They
started using the system in the 4th week of April 2000 and have found it very useful. They
have seen the actions been taken very fast on the issues raised by them in the CRS.

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The benefits of CRS were predicted to be manifold. CRS has helped APTECH in reaping
these benefits.

APTECH’s is a people- oriented service. Some of the

employees are brilliant, and possess domain specific
expertise. There existed informal networks within the
1 organization, e.g. a particular employee was
considered to be the ‘boss’ in Java programming, and
would be consulted on this particular subject.

The aim was to go beyond customer service.

2 The endeavor was creating a virtuous cycle, a
spiral process, of a learning organization.

To measure the performance of the

3
employees.

To create a tighter and well-knit network

4 among the employees.

To improve the quality of response to

5
feedback

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There are organizational constraints encountered in execution of CRM programs. Mainly
they are as follows:
 A mismatch between resource allocated and service levels desired for building
customer relationship
 Absence of financial business case and ROI for investments in Customer
Relationship
 Horizontal non alignment of organisations to customers line of sight
 Balance to be achieved between maximisation of revenue and customer
satisfaction.

Direct selling machinery would have costs that are significantly higher than referral sale –
hence the need to invest in customer relationship with an eye on acceleration of referrals so as
to bring down costs or increase productivity of sales. (higher cold call to order ratio) . Figure
1 illustrates the phenomenon that organizations can drive referral sale line in a manner that
can reduce time T1 and with that in figure 1(a) the overall unit selling cost (average of direct
sales cost + referral sale cost) can be reduced with higher sales productivity.

Composite Costs
100%
100% Direct Sale

%
50%
of Unit
ove Selling
Referral Sale cost
rall
sale

T1 T1
Time Time

Fig. 1. ‘Torpedo Graph’ Fig. 1.(a) Sale Cost Line

Figure 2 illustrates that with a given investment in direct sale channel the productivity can at
best be only slightly increasing line, while a referral line will be an exponentially increasing
trend line with growing subscriber numbers. This creates a multiplier effect that quickly

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overtakes the direct sale numbers. Organization dependency on direct sale can gradually be
reduced since they stand to account for reduced numbers in the overall sums.

Direct sale

Sale
Unit
No.

Referral Sale

T1
Time Figure 2

Organizational measure of referral propensity can be taken through customer feedback on

their willingness to recommend the product to their friend and acquaintances.

Data of Likelihood to Recommend from Kerala market of Escotel subscriber is illustrated

below. This is based on face to face survey conducted through independent market research
agency on a sample base with >95% confidence level. Company commissioning the survey
was identified to the respondents.

1997 1998 1999 2000

71% 78% 86% 86%

Impact of referrals was measured as a part of six-sigma improvement team working on Sales
productivity improvement. Order conversion rates from various sources of lead generation
was taken and the results are as follows

Method of lead generation Sample Size Conversion Rate

Cold Calling 2210 3%
Database 1674 1%
Referrals 352 29%

Organization/selling channels have to individually draw the sale cost line for their products.
This will determine saving rate impact through referrals and can serve as a decision point for
how much investment should be made for tracking & accelerating referrals.

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 CRM in HMTL: A Financial Analysis

Hutchison Max Telecom Ltd. (HMTL) is the leading cellular operator in India. It owns the
brand ‘Orange’. In Mumbai, there are about 14,000 customer interactions in a day, i.e. on an
average a single customer interacts once in 14 days. Therefore, one can appreciate the fact for
having an effective customer relation.

The customer interactions can be segmented into various categories:

E-Mail 2%
Direct Walk-In 5%
Fax/Letter 8%
Calls 85%

The peak load hours are from 10:00 AM to 11:00 PM. In telecom industry the cost of
handling the customer can be calculated by assigning the various cost factors such as cost of
operation of call office, cost of mailers. Staffing cost, etc. it is not possible to quantitatively
find out the benefits of having a CRM. Instead of the Cost-Benefit Analysis, it is
recommended the cost of not serving the customer (i.e. when CRM is not in place).

Financial Analysis
The complete transition from the internally developed CRM to a commercial CRM package
would take 6 to 12 months.
A typical commercial CRM package to be installed at HMTL would cost around Rs. 5 Crores
(Assuming one would go for a top of the line CRM package like Siebel, Vantive, Clarify,
Oracle.)

Assumptions
Package is purchased for 100 sales people

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Cost of Product acquisition including opportunity cost and training cost is approximately: Rs.
5 Crores.

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Other Costs are as follows:
 Staffing Cost: In call centre at HMTL, the staff requirement is around 100, which can be
reduced to 80 using CRM
 Telephone outcall cost
 Delay cost
 Transition cost

Benefit Parameters
 Reduction in staff cost
 Enhanced productivity (subscriber to agent ratio)
 Quicker turnaround times
 Saving due to call handling by alternate channels
 Better Customer Relations
 Churn Prevention
 Segmented Promotions

The total benefits expected from these parameters are approximately Rs.3 Crores. Hence it is
safe to conclude that the payback period should be approximately 2 years for HMTL.

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 Input to System
FRONT END
IVR/VoIP

Computer
Call Centre
ACD
Browser
Presentation
Layer
Telephones

Web mail
Server

Computer

MIDDLE
WARE

Database

OLAP Server Output to Management

BACK END

Data Storage Layer

Data Mining Layer

ERP

Figure. CRM Scheme In HMTL

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 CONCLUSION

CRM is basically the collection and distribution of “all” data to “all” areas of business.
The data can then help market the company, help up sell to existing customer, understand
customers better so that customers can be given better service and allows them to interact
with the company by whatever means they wish. Customer Relationships are achieved by the
whole company working together to give customers what they really want. CRM is a
business strategy to create and sustain long-term, profitable customer relationships.
Successful CRM initiatives start with a business philosophy that aligns company activities
around customer needs. Only then can CRM technology be used as it should be used—as a
critical enabling tool of the processes required to turn strategy into business results.

CRM is now an integral part of the business vision/strategic roadmap of companies in

virtually every industry domain and feeder-linked sectors. It is the various stages that lead to
better understanding of all aspects of customer behavior; interface points, transactional issues
and “intangible” benefits proffered that helps a company differentiate itself from others in
terms of leadership and market dominance in a particular space. The “We Care” principle has
to be embedded in the very vitals of the organization for long-term benefits to accrue and for
“delighted customers to keep coming back.

Clearly, it is a matter of being in synch with customers’ changing needs that shapes
business success stories. Companies that continuously align and re-align their brands,
products and services have a better chance of understanding their present as well as future
consumers. Total customer orientation centered on customer understanding is bound to
provide long-term customer value and by inference superior company and shareholders value
in terms of sustainable growth and profits.

Customer Relationship Management is a prerequisite for maneuver strategy as it provides

customer information proactively for making swift moves. When there is a strong info-
structure available for the firm through greater access of customer information that can be
manipulated with changing time and market dynamics, it allows the marketer to make

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calculated judgments as to where and when to move. Tools of customer relationship
management like data warehousing help in realizing optimal results when the managers
understand the strategic paradox. Customer Relationship Management helps in developing
the most important competitive advantage in the form making the desired consumer
information available at the fingertips of the decision makers for taking optimum decisions.

It has been said that the most successful companies of the future won’t be the big ones;
they’ll be the fast ones. The power of the emergent social network will undoubtedly increase
as global companies make their impact known, and you can bet that social networks will try
to keep up with even the fastest corporation. The Internet will be the lens used by social
networks to monitor bad corporate behavior, and the wallet will be the stick to whip
corporations into shape.

CRM applications will increasingly mimic the way our social environment works in the years
ahead.

Finally, concluding about CRM in the following points:

 A strategy defined around producing value to fulfill business needs.
 A collaborative value chain of all institutions and processes needed to fulfill business
needs.
 A set of measurements that reflects how successful (or unsuccessful) the collaborative
value chain has been in fulfilling customer’s needs and the ability to adjust the
processes to improve the rate of success.
 A system that provides insight into customers so that improvements can be made.
 Access to all the services customer need for news, information, purchases, business,
delivery, and on to infinity, from wherever customer are in whatever circumstances.

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 BIBLIOGRAPHY

References
 Gruen, T. W. (1997), ’Relationship Marketing: The Route to Marketing Efficiency and
Effectiveness’, Business Horizons, November – December,
 Berry, L. L. (1983), ‘Relationship Marketing of Services: Growing Interest, Emerging
Perspectives’, Journal of the Academy of Marketing Science,
 Parasuraman, A., Zeithaml, V. A., and Berry, L. (1985), "A Conceptual Model of Service
Quality and its Implications for Future Research," Journal of Marketing
 Payne, A. (2000), ‘Relationship Marketing: The UK Perspective’, in Sheth, J. N. and
Parvatiyar, A. (eds.) Handbook on Relationship Marketing, Sage Publications, Inc.:
 Reichheld, F. F. and Sasser, W. E. (1990), 'Zero Defections: Quality Comes to Services',
Harvard Business Review, September – October
 Sheth, J. N. and Parvatiyar, A. (1995) ‘Relationship Marketing in Consumer Markets:
Antecedents and Consequences', Journal of the Academy of Marketing Science
 Jagdish And Sheth, Atul Parvatiyar, G Shainesh, ‘CRM Emerging Concepts, Tools and
Applications’
 Philip Kotler: Marketing Management

Websites
 www.crmassist.com
 www.crmguru.com
 www.crmfoundation.com
 www.crmindia.org
 www.crmsearch.com
 www.crmcommunity.com
 www.CRM-forum.com

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ABC - Activity Based Costing An accounting method that enables an organization to understand
where costs are incurred by allocating costs to all activities and then charging these to the relevant
product, product line, customer or supplier.
Anomalous data - Data that result from errors (for example, data entry keying errors) or that represent
unusual events. Anomalous data should be examined carefully because it may carry important
information.
Analytical model - A structure and process for analyzing a data set. For example, a decision tree is a
model for the classification of a data set.
Artificial neural networks - Non-linear predictive models that learn through training and resemble
biological neural networks in structure.
Association - A search for associated products in a range. Used in retail (simultaneous purchases),
services and finance (multi-holding) etc. Temporal associations trace out sequences of associations.
They enable purchasing behavior patterns to be anticipated. They are based on the probability of
purchase of a product at a known time, taking into account the purchase of another product at instant.
Business Intelligence (BI): This process involves analyzing and exploring structured, domain-specific
information — often stored in data warehouses — to enable users to discern trends, recognize patterns,
gain insights and draw conclusions. The BI process includes communicating findings and effecting
change. The BI domains include customers, products, services and competitors.
Back-office - business applications which relate to the day to day transactions of a business such as
accounting, logistics, human resources
Call-centre - application which helps to manage telephone based contact with customers.
Configurator - application which uses a set of rules to help guide a customer through the features and
options of a complex product ensuring that they only choose a combination which is compatible and
meets their needs
Classification - Definition of segments.
Contact strategy - matching life stage with the probability of responding to a customized promotion.
Clustering - The process of dividing a data set into mutually exclusive groups such that the members
of each group are as "close" as possible to one another, and different groups are as "far" as possible
from one another, where distance is measured with respect to all available variables.
Churn analysis - The profile's definition of customers that have left and the identification of customers
that are likely to leave.
Classification - The process of dividing a data set into mutually exclusive groups such that the
members of each group are as "close" as possible to one another, and different groups are as "far" as
possible from one another, where distance is measured with respect to specific variable(s) you are
trying to predict. Eg: classification problem is to divide a database of companies into groups that are as
homogeneous as possible with respect to a creditworthiness variable with values of "Good" and "Bad."

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Cross selling - Cross selling of a product. Enables the customer portfolio to be increased and their
loyalty to grow.
Database marketing - An approach by which computer database technologies are harnessed to design,
create and manage customer data files containing information about each customer's characteristics and
history of interactions with the company. These files are used as needed for locating, selecting,
targeting, and establishing relationships with the customers to enhance the long-term value of these
customers to the company.
Data mining - The process of selecting, exploring, and modeling large amounts of data to uncover
previously unknown patterns of data to gain a business advantage. Involves examining data on
customers and transactions in order to find hitherto unknown information in the data and respond to it
Decision tree - Technique splitting a population studied (purchasing, response, etc.) into a series of
sub-populations (branches) described by criteria. It is based on the explanatory capacity of response to
each of the criteria taken into account by the analysis. The representation in the form of a tree enables
easier analysis of the results. We also speak of segmentation trees (same thing).
Data warehouse - A system for storing and delivering massive quantities of data. The database which
allows the manipulation of large quantities of information to aid analysis and decision making
Data Mining: This functionality involves the process of discovering meaningful correlations, patterns
and trends by sifting through large amounts of data stored in repositories. Data mining employs pattern
recognition technologies, as well as statistical and mathematical techniques.
Decision tree - A tree-shaped structure that represents a set of decisions. These decisions generate rules
for the classification of a data set.
Direct marketing - All actions of direct communication with customers and prospects (often based on
the previous definition of segments).
Dynamic segmentation - This is based on the qualification, at each instant, of each customer in
relation to a family of offered products. A score per family is prepared and calculated periodically for
each customer. When the score reaches a threshold value, the customer is automatically prospected for
the corresponding offer.
Electronic CRM: E-CRM involves the integration of Web channels into the overall enterprise CRM
strategy. The goal is to drive consistency within all channels relative to sales, CSS and marketing
initiatives to achieve a seamless customer experience and maximize customer satisfaction, customer
loyalty and revenue. A component of CRM and e-business, it includes such Web-based customer
channels as e-sales, e-service, e-marketing and e-retailing.
EFTPOS - Electronic Funds Transfer at the Point of Sale - Technology that enables consumers to
pay for goods with plastic / cards to debit account directly.
EPOS - Electronic Point Of Sale – Checkout counter equipped with bar code reader

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Efficient Consumer Response (ECR) - ECR is a strategy to remove unnecessary costs from the
retail / grocery distribution system and make it more responsive to consumer demand. It requires
distributors and suppliers to focus jointly on the efficiency of the total grocery chain rather than the
efficiency of individual components. Aims to reduce total costs, inventories and physical assets and
improve consumer choice, satisfaction and service.
Exploratory data analysis - The use of graphical and descriptive statistical techniques to learn about
the structure of a data set.
Electronic Business: E-business comprises any Internet- or network-enabled business activity that
transforms internal and external relationships to create value and exploit market opportunities driven by
the new rules of the "connected economy".
Enterprise Resource Planning (ERP): This is a business strategy that improves shareholder and
customer value by integrating manufacturing, financial and distribution functions to dynamically
balance and optimize an enterprise's resources.
Electronic ERP: E-ERP represents the Web-enabled elements of an ERP business strategy that
improve shareholder and customer value by integrating enterprise manufacturing, financial and
distribution functions to dynamically balance and optimize the resources of the enterprise together with
its trading partners.
Front office - the category of applications that might be used by employees who have direct contact
with the customer or by the customer themselves, such as a call-centre or sales force automation system
Knowledge Management (KM): This is a business process that formalizes management and leverages
an enterprise's intellectual assets. KM is an enterprise discipline that promotes a collaborative and
integrative approach to the creation, capture, organization, access and use of information assets,
including the tacit, uncaptured knowledge of people.
Lifestyle data - Data on individuals/households typically collected via consumer questionnaires, sold
by companies such as ICD and Claritas.
Life Time Value (LTV) – Predicted value of a customer to an organization, i.e. expected future
profitability. Rather than concentrating on the instantaneous profitability of a customer, we seek to
determine their trajectory over time (inactive-> average customer-> good customer-> very good
customer), and then estimate the profitability potential over the period of the relationship. Actions are
subsequently implemented which will raise the customer on this trajectory (or will avoid a descent).
Marketing information database - This is created from internal management systems and external
data. It is the customer knowledge base (data warehouse marketing).

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Middleware: This term is used in many ways. Basically, middleware is the software "glue" that helps
programs and databases that may be on different computers work together. More formally,
GartnerGroup defines middleware as "runtime system software that directly enables application-level
interactions among programs in a distributed computing environment." Its most basic function is to
enable communication between application programs or DBMSs within a single-application system or
across multiple-application systems
Marketing mix - Elements of the marketing process that need to be coordinated - often referred to as
the four P's: product, price, place (physical distribution and marketing channels - in other words how
the product gets to where the customer wants it - for example sales force, wholesale or retail outlets
etc), promotion.
One to One Marketing - Relational marketing conducted at the individual level by establishing a
personal relationship (including in direct marketing) with each customer. Depending basically on the
number of customers, it is the last stage in the customer relationship.
OLAP - Online analytical processing. Refers to array-oriented database applications that allow users to
view, navigate through, manipulate, and analyze multidimensional databases.
Predictive model - A structure and process for predicting the values of specified variables in a data set.
7 P's of relationship marketing - 4P's + People, Process, Provision of Customer Service.
POS - Point of Sale - Place where purchase is actually made e.g. checkout or hole-in-the-wall
Partner Relationship Management (PRM): This is the CRM element that extends sales, marketing,
customer service and other enterprise business functions to partners to foster more-collaborative
channel partner relationships.
Personalization: Using continually adjusted user profiles to match content or services to individuals,
personalization includes determining a user's interest based on his or her preferences or behavior,
constructing business rules to select relevant content based on those preferences or behaviors, and
presenting the content to the user in an integrated, cohesive format.
Profiling – Describing typical customers in terms of demographics, habits etc
Psychographics - Basis for segmenting consumer markets based on social class (A, B, C1 etc),
lifestyle and personality.
Relational marketing – Marketing centered on the relationship established with the customer base. It
rests on continuous knowledge of the requirements of the customer in relation to supply and the
channels of distribution. Expected results: loyalty, resistance to external offers, and power of
recommendation.
RFM -(Recency, Frequency, Monetary) - classic marketing technique, you typically want to find
customers who purchased recently, purchase frequently and spend a large amount.
Share of wallet - a measure of how much of a consumer's total business a company has.

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Supply Chain Management (SCM): This is the process of optimizing the delivery of goods, services
and information from the supplier to the customer. SCM is a set of business processes that
encompasses a trading-partner community engaged in a common goal of satisfying the end customer.
Sales force automation (SFA) - a tool for use by the sales force which helps them to manage the sales
cycle, hold information about their contacts and give them access to information from the back-office
systems about pricing and product availability
Segmentation - Technique of identification, on the criteria chosen, of groups of potential customers
with the same requirements and needs (eg. with regard to the product offered)
Four broad types of criteria may be distinguished:
1. geographical (territory, region, housing micro-area)
2. socio-demographic (age, income, sex, profession, etc.)
3. behavioral (purchase situation, user status, etc.)
4. Psycho graphical (social class, lifestyle, cultural class, etc.)
Targeting - Selection of a sub-population in a customer or prospect file. Targeting may be done by
focusing on:
1. the costs generated
2. the expectation of maximum profitability
3. the expectation of maximum return
Telephone Preference Service (TPS) - A service enabling domestic telephone subscribers who don't
wish to receive unsolicited telephone calls to register their numbers.
Up-selling - Technique of increasing the value of a customer by selling products with a higher status or
perceived value (eg. A credit card company offers a gold card to its standard card holders.)
Value chain analysis - Technique used to view organization as a series of customer facing processes.
Constructing the value chain consists of identifying the sequence of direct activities that add value to
the customer and indirect or support activities that enable the direct activities to take place.

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