Chapter 1
Introduction to CRM
Chapter 1 – Introduction to CRM 1
Learning Objective
To understand Fundamentals of Customer
Relationship Management (CRM)
To understand Why CRM is important for all
organisations
To understand the evolution of CRM
To understand the definition of CRM
To understand the CRM Strategy
To understand the significance of CRM
To Identify and understand the obstacles in CRM
implementation and Success
Chapter 1 – Introduction to CRM 2
Introduction to CRM
• Customer Relationship Management (CRM) is the
most potent and scientific approach in maintaining
and forging bonds with customers.
• CRM has at its core the focus on Customer
relationships as opposed to one-time transactions
signifies a paradigm shift that has revolutionised
marketing.
Chapter 1 – Introduction to CRM 3
Introduction to CRM
• Organisations worldwide are adopting customer
centric strategies, programs, tools and technology for
efficient and effective customer relationships.
• Companies are realising the need for in-depth and
integrated customer knowledge in order to build close
cooperative and partnering relationships with their
customers
Chapter 1 – Introduction to CRM 4
Introduction to CRM
• CRM tools promise to individualise and personalise
the relationships with customers by providing vital
information at every point in the interface with the
customer
• Techniques deployed in CRM initiatives
• collaborative filtering,
• rule based expert systems
• Artificial intelligence
• Relational databases
Chapter 1 – Introduction to CRM 5
Defining CRM
• Way to identify, acquire and retain customers
• Way of automating the front office functions of sales,
marketing and customer service
• CRM has diverse definitions on the basis of diverse
perspectives which includes Business perspective,
Sales Force & Customer Service Automation
perspective and thirdly, integrated and technology
enabled CRM.
Chapter 1 – Introduction to CRM 6
Defining CRM
• CRM is thus a strategic use of information,
processes, technology and people to manage the
customer’s relationship with the organisation across
the whole customer life cycle.
Chapter 1 – Introduction to CRM 7
Main Elements of CRM Definition
• Focus on strategic impact rather than operational
impact
• Benefits are generally long terms rather than
immediate
• Requires understanding that benefits will really occur
and set realistic expectations
Chapter 1 – Introduction to CRM 8
Main Elements of CRM Definition
• CRM is a total discipline
• CRM Uses
• Machine – CRM technology
• Power – People
• To Turn Raw material – customer information
• Into Products – Processes and interactions that
build customer loyalty
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Key Components of CRM
• Information – It is a key raw material for CRM. The
key steps include data identification, marketing data,
listing of data and overlay of data.
• Process – Customer centred processes are the
product of CRM
• Technology – It is the machinery that enables CRM
to Work
• People – People are the energy source of the CRM
and must be set right for the entire system to work.
Chapter 1 – Introduction to CRM 10
Key Components of CRM - Information
• Identification Data – Name, address, phone etc
• Marketing Data – Descriptions, traits, preferences
• List data – Name and address collected by third
party which can be bought or leased
• Overlay data – Customer profile data collected by a
third party which can be leased and appended to
existing customer records
Chapter 1 – Introduction to CRM 11
Key Components of CRM - Process
• All current and future processes that touch the
customer
• Touch points or means by which one interacts with
customers
• Identifying and eliminating process disconnects and
white spaces
• Integrating and rationalising processes from the
customer’s point of view
Chapter 1 – Introduction to CRM 12
Key Components of CRM - Technology
• Software products – process automation tools,
analysis tools
• Networking and integrating applications and
databases
• Databases, either purchases or home grown
• Security features such as encryption tools and
firewalls
Chapter 1 – Introduction to CRM 13
Key Components of CRM - People
• People are reset through various change
management tools and support mechanisms
• Training and education
• New Tools
• Measurements and rewards
Chapter 1 – Introduction to CRM 14
History and Evolution
• The Beginning – saw emergence of database
marketing
• The 1990s – Focus shifted to providing customer
service and other perks to improve customer loyalty
• Coming of Age – CRM became the way to
continuously update the understanding of customer
needs and behaviour
• Today – Relies heavily on the basis of Customer
Service or Technology
Chapter 1 – Introduction to CRM 15
History and Evolution – Market Forces
• Technological advances in information technology
made CRM feasible by enabling organisations to
keep a records of each and every transactions
• Growth of direct marketing initiatives enabled more
organisations to enter a one on one relationship
• Businesses realised that acquiring customers was
only first step in the marketing cycle and retaining and
improving services are the biggest challenges
Chapter 1 – Introduction to CRM 16
Evolution of CRM – Specific Developments
• Personal Information Management – Began with
introduction of the Rolodex in the late 50s with
centralised contacts information that was used on
frequent basis
• Contact Management Software – Offered value
added system of tracking sales
• Customer Relationship Management (CRM) –
CRM was viewed dimensionally including Operations,
Sales Force, Marketing and Customer Service.
Chapter 1 – Introduction to CRM 17
Importance of CRM
• An increasingly saturated market
• Replaceable products with short product cycles
• High customer standards
• Customer expectations regarding market
transparency
Chapter 1 – Introduction to CRM 18
Major Benefits of CRM
• Centralised data – Allows complete view of all
customer interactions
• Marketing automation – assists in follow up
activities and tracking the response rates
• Customer Service and Support Solutions –
Enables tracking and resolution of customer
questions, issues and technical support
Chapter 1 – Introduction to CRM 19
Major Benefits of CRM
• Advanced Account and Opportunity Management
– Opportunity management allows for tracking of
probability of closure, lead sources and status.
• Robust Forecasting and Reporting – Timely
revenue forecast helps to close more deals
Chapter 1 – Introduction to CRM 20
Major Benefits of CRM – Centralised Data
• Complete view of the customer
• Enables employees to respond to customer more
effectively
• Employee is aware of all interactions the customer
had with sales and marketing to customer service and
support
Chapter 1 – Introduction to CRM 21
Major Benefits of CRM – Marketing
Automation
• Usage of robust automation tools to segment
customers and prospects
• Automation of campaign activity scheduling and
follow up activities
• Revenues can be tied to specific campaigns so that
its easy to analyse the campaign ROI
Chapter 1 – Introduction to CRM 22
Major Benefits of CRM – Customer Service
and Support
• Organisation can track and resolve customer
questions, issues and technical support enquiries
• Web portals empower customer to find answer the
need
Chapter 1 – Introduction to CRM 23
Major Benefits of CRM – Advanced Account
and Opportunity Management
• Allows for tracking probability of closure of
opportunities
• Helps to manage the products, lead source, status of
opportunity and competitors activities
• Proposals that include products, pricing and
discounts can be created for each opportunity
Chapter 1 – Introduction to CRM 24
Major Benefits of CRM – Robust Forecasting
and Reporting
• Accurate, timely revenue forecasts helps sales to
close more deals
• Increased profitability for the company
• Support expenses with revenue growth
• Give companies acute visibility into future product
and service demand trends
Chapter 1 – Introduction to CRM 25
Characteristics of CRM Maturity – Poor
Level
• No clear definition of customers
• Unrealisable data of customers held in disparate
locations
• No appreciation of customers desires and
expectations
• Customer value not measures
Chapter 1 – Introduction to CRM 26
Characteristics of CRM Maturity – Average
Level
• Customer definition exists, but no consensus across
the organisation
• Relevant but incomplete information
• Knowledge of customer preference exists but held in
silos
• Current value understood but future value not actively
considered
Chapter 1 – Introduction to CRM 27
Characteristics of CRM Maturity – Excellent
Level
• Agreed customer definition linked to present and
future strategy
• Comprehensive customer information within a single
view
• Ability to remember and recognize customers and
tailor your offering to their preferences
• Clear understanding of customer current and
potential value
Chapter 1 – Introduction to CRM 28
Benefits of CRM for Customers
• More attention to customer needs and customer
requirements
• Better service by focusing on the value created for
customers
• Personal attention at the right time through better use
• Relevant advice and suggestions based on an
integrated customer view and activation
• A positive customer experience
Chapter 1 – Introduction to CRM 29
Benefits of CRM for Management
• Enhanced attention to customers by clear
prioritisation
• More overview and insight into customer interaction
processes
• Better understanding of what customers and
customer segments
• Better understanding of activities and business units
create value
Chapter 1 – Introduction to CRM 30
Benefits of CRM for Marketing
• Improved lead generation by feedback of results and
conversion of score
• Better lead nurturing to continue a relationship with
prospects
• Better planning by anticipating customer needs
• Personal marketing specifically targeted to the needs
of the customer
Chapter 1 – Introduction to CRM 31
Benefits of CRM for Sales
• Effectiveness by focusing on the most profitable
customers
• Better identify customer needs and specific customer
requirements
• Better scoring opportunities by undertaking at the
right time at the right relationships
• Effective cross sell of other products on the basis of a
better understanding of the customer
Chapter 1 – Introduction to CRM 32
Basis for providing direction for a CRM
strategy
• Identify the best customers and the worst
• Distribute value differently to different customers
• Compete on the scope
• Focus on Strategic Capabilities
Chapter 1 – Introduction to CRM 33
Basis for providing direction for a CRM
strategy
• Wining through Customer centric innovation
• Measure customer performance
• Unlearn and relearn
• Redefine the focus
• The new competition
Chapter 1 – Introduction to CRM 34
Identify the best customers and the worst
• There is a need for identification of good customers
• Identification of customer for special considerations
and services
• Segregating the most responsive
• Deciding customers to focus on and which ones to
neglect
Chapter 1 – Introduction to CRM 35
Distribute value differently to different
customers
• Company should determine which are the best,
average and worst customers and ensure each
receives appropriate value
• Evaluation of customer costs, gross margin, inventory
carrying costs, late payments, customer
communications and merchandise returns
Chapter 1 – Introduction to CRM 36
Compete on Scope
• Discriminating among customer is to become more
relevant to each one
• Broadening range of products, services or solutions
• Collaborate with third parties so that companies
received the value each wants
• In the era of individual customers, unique value must
be created for each one
Chapter 1 – Introduction to CRM 37
Focus on Strategic Capabilities
• Strategies should be framed in terms of strategic
capabilities
• End customer can only be as strong as weakest link
• Organisations must plan to create durable bonds with
these stakeholders
Chapter 1 – Introduction to CRM 38
Wining through customer centric innovation
• Creating new and mutual customer value, the core of
CRM
• Process for customer inclusion and collaborative
innovation should exists
• Integrating the customer’s technology, people and
business processes with those of organisation is the
key
Chapter 1 – Introduction to CRM 39
Measure Customer Performance
• Focus on customer profitability with the goal of
improving it
• Measures are not restricted to product, product line
and divisional profitability
• Sometime quite beneficial to sell product at loss if the
overall relationship is more profitable
Chapter 1 – Introduction to CRM 40
Unlearn and Relearn
• Unlearn the principles of mass
• Changing entrenched attitudes throughout the chain
of relationships to achieve the end result
• Top brass should become involved in the visioning
exercise; their commitment is most important if the
plan is to work
Chapter 1 – Introduction to CRM 41
Redefine the Focus
• Many leader of firms focus on products or services
• CRM organisation will have to make significant
change in its processes as it begins to supply what
customers want rather than what the company makes
Chapter 1 – Introduction to CRM 42
The New Competition
• Many leader of firms focus on products or services
• CRM organisation will have to make significant
change in its processes as it begins to supply what
customers want rather than what the company makes
Chapter 1 – Introduction to CRM 43
Competing with CRM
• Gain preferential access to customer
• Emerge as low cost producer
• Winning the right new employees
• Collaborating with selected group companies
• Developing more customer data
• Creating the best new strategic capabilities
Chapter 1 – Introduction to CRM 44
Key Drivers to CRM
• Market drivers
• Customer related drivers
• Business drivers
• Technological drivers
Chapter 1 – Introduction to CRM 45
Creation of customer relationship strategy
• Knowledge – It is necessary to identify the most
profitable customers
• Listening – The emphasis is on customer loyalty
• Growth – Through communication and value
production in the most suitable way
• Results evaluation
Chapter 1 – Introduction to CRM 46
Four Main classes for communication in
CRM
• Mass Communication – Has a great impact though
it is generally not aimed at a particular market
• Communication per market Segment - Company
seeks the optimum combination of channel and their
respective frequency of use to reach specific
segments
• Direct Marketing – Aimed at a particular portion of
specific market segment
Chapter 1 – Introduction to CRM 47
Four Main classes for communication in
CRM
• One to One Communication – Based on direct
interaction between the company and the customer
Chapter 1 – Introduction to CRM 48
CRM Solutions
• Sales Force Automation
• Customer support
• Marketing Automaton
• Collaboration
• Reporting
Chapter 1 – Introduction to CRM 49
CRM Solutions – Sales Force Automation
• Improves sales performance
• Helps to track and share opportunities
• Facilitates Managing and up-selling to existing
accounts
• Monitor pipeline stages through dashboards
Chapter 1 – Introduction to CRM 50
CRM Solutions – Customer Support
• Improves customer relationships by helping
supporting representative track customer cases
• Helps manage product problems
• Respond to customer inquiries
• Share customer service information across entire
organisation
Chapter 1 – Introduction to CRM 51
CRM Solutions – Marketing Automation
• Allows companies to develop, launch and track
campaigns and other marketing offers
• Integrates closely with Sales Force Automation
Chapter 1 – Introduction to CRM 52
CRM Solutions – Collaboration
• Improves employee communications by integrating
calendars
• Allows sharing of tasks, documents, product
information
• Records of customer accessible to all employees
concerned from the respective department
Chapter 1 – Introduction to CRM 53
Aspects of CRM
• Operational CRM – involves direct interaction with
customers
• Analytical CRM – deals with customer related data
• Collaborative CRM – strategic and tactical alignment
across functions
Chapter 1 – Introduction to CRM 54
Obstacles in Success of CRM
• Lack of Guidance
• Integration woes
• No Long term Strategy
• Inaccurate Data
Chapter 1 – Introduction to CRM 55
Obstacles in Success of CRM
• Lack of Employee Buy-in
• No Accountability
• Poor executive sponsorship
• Not engaging doers as stakeholders
Chapter 1 – Introduction to CRM 56
Obstacles in Success of CRM
• Implementing CRM with clear road map
• Providing inadequate training
• Skipping data migration or data clean up
• Not providing value to all stakeholders
• Trying to do too much once
Chapter 1 – Introduction to CRM 57
Summary
• CRM is not about sales but interaction of the entire
business with the customer
• CRM covers all interactions. A good CRM allows a
business to acquire customers, provide customer
services and retain valued customers
• CRM applications often track the customer interests
and requirements as well as their buying habits
Chapter 1 – Introduction to CRM 58
Summary
• Successful organisations can never lose sight of their
customers demands and are careful to keep track of
their needs as they change and evolve
• CRM solutions have become strategic requirements
in an customer centric economy
Chapter 1 – Introduction to CRM 59
