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Cases UNIT-I
Customer Relationship Management A Conceptual
  • There is only one boss the customer. And he can
    fire everybody in the company, from the chairman
    on down, simply by spending his money somewhere

Learning Objectives
  • After studying this chapter, you should be able
  • Provide the conceptual understanding of Customer
    Relationship Management.
  • Identify the stakeholders of CRM practices of an
    organisation and their role.
  • Apprehend the advantages accruing to the
    organisations on account of successful CRM

  • Developing close, cooperative relationship with
    customers is more important in the current era of
    intense competition and demanding customers than
    it has been ever before.
  • Many scholars are interested in strategies and
    processes for customer classification and
    selectivity one-to-one relationships with
    individual customers key account management and
    customer business development processes
    frequency marketing, loyalty programmes,
    cross-selling and up-selling opportunities and
    various forms of partnering with customers
    including co-branding, joint marketing,
    co-development, and strategic alliances (Sheth
    and Parvatiyar 2000).
  • A majority of these promises are to individualise
    and personalise customer relationships by
    providing vital information at every point of
    customer interface.

CRM A Historical Perspective
  • CRM is often considered as database marketing
    primarily linking marketing of the organisation
    with the database of the customers.
  • Some theorists have been considering it as an
    exercise for customer retention as many theories
    and studies have been emphasizing on the
    rationale for keeping the customers. This
    requires a variety of techniques, especially
    post-sale initiatives, to keep the customers for
    life. This was believed to be a mechanism to keep
    the existing customers happy so that they remain
    with the organization and may, if possible,
    generate positive referral for the company's
    products and services.
  • Shani and Chalasani (1992) 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 the mutual benefit of both sides,
    through interactive, individualized and
    value-added contacts over a long period of time".
  • Similarly, Jackson (1985) applies the individual
    account concept in industrial markets and sees
    CRM as, "marketing-oriented towards strong,
    lasting relationships with individual accounts".

Strategic Orientation in Marketing
  • McKenna (1991) emphasized on strategic
    orientation and argued that organisations need to
    put the customer first and shift the role of
    marketing from manipulating the customer (telling
    and selling) to genuine customer involvement
    (communicating and sharing the knowledge) for
    long-term growth of the business.
  • Berry (1995) focused on developing closer
    relationship with the newly attracted customers.
    To turn them into loyal customer category
    required deep-rooted strategic intent on the part
    of the corporates.
  • According to Berry, merely attracting new
    customers should be viewed only as an
    intermediate step in the marketing process. He
    proposed relationship marketing as "attracting,
    maintaining andin multi-service organisations
    enhancing customer relationships".
  • An important dimension of CRM study is selecting
    the profitable customers. Companies need to
    understand who the profitable customers are and
    accordingly design marketing programme as per the
    exclusive requirements of those customers.

  • "Enterprise approach to understanding and
    influencing customer behaviour through meaningful
    communications in order to improve customer
    acquisition, customer retention, customer
    loyalty, and customer profitability". (Swift
  • CRM is a comprehensive strategy and process of
    acquiring, retaining and partnering with
    selective customers to create superior value for
    the company and for the customers.
  • ( Sheth and Parvatiyar 2001)
  • CRM is considered as strategic, process
    oriented, cross-functional and value creating for
    buyer and seller and a means of achieving
    superior financial performance (Lambert,
  • The practice of CRM is described as the process
    for achieving a continuing dialogue with
    customers across all available touch points to
    offer them customized treatment, based on their
    expected response to available marketing
    initiatives, such that the contribution from each
    customer to overall profitability is maximized.
    (Bohling et al., 2006)

Definition. . . Contd.
  • A customer relationship management (CRM) systems
    is a combination of people, processes, and
    technology that seeks to provide understanding of
    a company's customer and to support a business
    strategy to build long-term, profitable
    relationship with customers".
    (Shang and Feng Ko, 2006)
  • CRM is an enterprise approach to understand and
    influence customer behaviour through meaningful
    communications to improve customer acquisition,
    customer retention, CL and customer
  • (Ngai et al., 2009)
  • CRM is defined as an effective tool to achieve
    the objectives such as satisfied and loyal
    customers and increased market share.
  • (Shafia et al., 2011)

  • Based on the understanding available of Customer
    Relationship Management, it can be defined as
  • Customer Relationship Management is a
    continuously updated process of identifying
    relative value of customers and designing
    customized company interaction to delight them so
    that they do not just remain with the company
    profitably but also be the companys ambassador.
    Full involvement and empowerment of employees and
    appropriate technology are two essentials for
    successful CRM.
  • The above definition tries to lay the foundation
    of CRM along with the objective for which it
    should be designed. The definition implies
  • CRM is a process
  • It needs continuous revision and updation.
  • Customer value identification is a must
  • Company interaction requires customization
    suiting to the exclusive profile of the customer.
  • It strives for customer delight.
  • CRM process aims at Profitable relation with the
  • It also aims to convert them to act as a
    companys brand ambassador.
  • Employees involvement and Empowerment is a must
    for its successful implementation.
  • Adequate technological support is also an
    essential for successful CRM.

Emergence of CRM Practice
  • Sheth and Parvatiyar (1995) had observed that
    developing customer relationship had been there
    since pre-industrial days.
  • The earlier businesses were between the
    agriculture producers and their customers. They
    used to have direct interaction.
  • Similar was the case with the people of other
    industies which were primarily cottage-based and
    have been making other essential items such as
    cloth and handicrafts. They have offered
    customised products to the customers.
  • Since, in most of these cases, there was direct
    interaction between the seller and the buyer,
    some of relationships tend to be built. The
    indirect form of marketing came only when the
    concept of mass production started and a mass
    production society was created. This process
    separated the production and consumption
    functions, leading to the emergence of middlemen
    in the marketing function.

Factors Responsible for Growth of CRM
  • The recent growth of CRM can be attributed to
    various factors. These include the reduced role
    of intermediaries, especially with the advent of
    sophisticated computer and telecommunication
    technologies. This growth in technology again
    allowed the producers to directly communicate and
    get in touch with the customers 24 x 7 at a very
    low cost.
  • The technology has given marketers more means at
    lesser cost to customise the marketing efforts.
    Hence, a modern service provider does not require
    middlemen to the same extent as it once used to.
  • Modern consumers are also found to be more
    interested and happy dealing with the company
    directly. The recent success of online banking,
    online shopping, selling of books, etc. are just
    a manifestation of the interest shown on both
    sides, i.e. the buyer as well as the seller.

  • For example, in the airline industry, most of the
    airline companies are now de-intermediating the
    ticketing system. Till recently, the sale of
    airline tickets had been dominated by agents who,
    from time to time, have been dictating their
    terms and conditions and have been controlling
    the flow of customers. But now, most of the
    airline companies have done away with this format
    and have introduced e-ticketing where the
    customers can directly buy ticket from the
    company website.
  • This success of doing without intermediaries is
    also on account of the growth of service economy.
  • Since services are produced and delivered at the
    same time, the role of intermediary gets
  • Since the customers transact directly with the
    service provider, he develops greater relational
    bonding with the company and its people. This
    leads to greater need of maintaining and
    enhancing the relationship which provides greater
    fruits. This makes CRM so important for all those
    people involved in marketing of services in some
    form or the other (Berry and Parsuraman 1991
    Bitner 1995 Crosby and Stephens 1987 Crosby et
    al. 1990 Gronroos 1995).

Factors Responsible. . . Contd.
  • Another factor which has been responsible for the
    increased need and use of CRM, is enhanced
    emphasis that companies lay on adopting total
    quality management as an essential component of
    modern business.
  • This increased use of total quality in all
    functions of the management by the companies has
    forced them to involve the suppliers and the
    customers across the value chain.
  • The application of various supply chain
    initiatives such as Just in Time (JIT), Material
    Resource Planning (MRP), and Enterprise Resource
    Planning (ERP) is not possible unless the company
    works in close relationship with all the
  • The advent of digital technology has enabled
    companies to sell even complex products.

Factors Responsible. . . Contd.
  • Earlier cars were sold only through dealers.
    Today, the concept of permission marketing is
    doing the rounds. Marketers have become so
    personal in their service offers and delivery
    that they seek permission even before making a
    visit and asking for sale. The car salesmen take
    prior appointment with the prospective buyer,
    visit him with all the details along with a demo
    car to get him the taste of the drive. At times,
    they also take a person from the finance company
    along to get the finance issue resolved then and
    there. Such procedures have led to the foundation
    of strategic partnering within the overall domain
    of Customer Relationship Management.
  • In this era of hyper competition, marketers are
    forced to be more concerned with customer
    retention and loyalty (Dick and Basu 1994
    Reicheld 1996). As several studies have
    indicated, retaining customers is a less
    expensive and, perhaps, a more sustainable
    competitive advantage than acquiring new ones
    (Rosenberg and Czepiel 1984).

Factors Responsible. . . Contd.
  • On the supply side, it pays more to develop
    closer relationships with a few suppliers than
    develop more vendors. In addition, several
    marketers are also concerned with keeping
    customers for life, rather than making a one-time
    sale (Cannie and Caplin 1991). There is greater
    opportunity for cross-selling and up-selling to a
    customer who is loyal and committed to the firm
    and its offerings. In the world of ever-changing
    customer expectations, cooperative and
    collaborative relationships with customers seem
    to be the most prudent way to keep track of their
    changing expectations and appropriately
    influencing them.

CRM Cycle
  • The Customer Relationship Management cycle
    consists of those stages that conform to the
    objectives laid down in its definition. That is,
    from acquisition of customers by creating value
    to them to learning from the customers, going by
    the route of earning profits from them for the
    organisation on a sustained basis.
  • Customer acquisition starts either through the
    traditional advertising or through referrals. The
    next stage is of customer development through
    personalisation of communication and
    customisation of products and services by way of
    a mutual learning process. As a result,
    leveraging of customer equity occurs through
    cross-selling and up-selling. Then retention of
    existing customers takes place. The organisation
    also benefits from the new customers that it
    acquires through positive referrals.

Customer life cycle management
Stakeholders in CRM
  • There are four principal stakeholders who play a
    major role in the entire process of Customer
    Relationship Management
  • Customers Customers, of course, are the most
    important persons in the CRM design for whose
    delight the whole exercise is conducted.
  • Employees They are the set of people who
    execute the CRM design. They include those right
    from the frontline staff who actually executes to
    the top management who designs the CRM.
  • Suppliers They are the part of system who
    provide input to a company's value chain.
  • Partners They are the creators of additional
    value for the customers.

Significance of CRM
  • The American Society of Quality and Arthur
    Anderson Consulting Inc., in their report
    published in 1977, have brought out following
    findings about customers
  • Customers tell eight friends about a satisfying
    experience and 20 friends for a negative
  • It is easier to influence existing customers to
    buy 10 more than increase the customer base by
  • Eighty per cent of successful new product and
    service ideas come from existing customers.
  • Repeat customers cost one-fifth less than new
    customers and can substantially increase profits.
  • CRM is a company-wide initiative and is a process
    to be continued with the organisation. The return
    on investment of CRM is overestimated in the
    short run and underestimated in the long run. But
    what is sure is that companies do accrue certain
    definite advantages of implementation of CRM. The
    advantages could be as follows

  • Perpetual stream of revenue A better served
    and delighted customer gradually becomes loyal.
    Once customer loyalty is built, the customer
    remains with the company and proves to be a
    perpetual source of revenue and profit often
    increasing over a period of time.
  • Positive referral creation A satisfied
    customer often spreads positive things about the
    company to the would be customers. Such positive
    opinion proves to be more reliable and authentic
    than companies' propaganda, including
    advertisements and consequently, brings in more
  • Provides premium A customer satisfied with the
    service of a particular company is found to be
    ready to pay a little premium on the
    products/services and does not want to take risk
    with a new company.
  • Helps customer retention One of the biggest
    advantages of CRM is that through personal and
    effective customer care and service, it helps the
    company keep customers for life. Retaining
    customers with the company helps in many ways and
    contributes straight away to the company's bottom

Advantages. . . Contd.
  • Lowers cost of sale A satisfied customer does
    not require to be lured every time by the company
    and, hence, his subsequent acquisition cost to
    the company decreases. This helps the company
    lower cost of sales.
  • Helps understanding consumer behaviour By
    providing personal service to its customers, the
    company understands the consumers and can adapt
    itself to their changing requirement. This
    also helps companies offer a complete set of
    personalised solutions to customers.
  • Provides opportunity to cross-sell and up-sell
    A satisfied customer is expected to come back to
    the same company for repeat purchases. In case of
    any cross-sell and up-sell, he again comes back
    to the same company and with no extra expense,
    the company is able to get him for more products.
  • Reduces marketing time Through positive
    referrals and opportunities to cross-sell and
    up-sell, the customer acquisition becomes easier
    and consequently leads to reduced marketing time.

Advantages. . . Contd.
  • Channel cost rationalisation An effective
    CRM provides an opportunity to the companies
    to value the cost of various channels with
    respect to its profitability and the customers
    may be served via a channel that is
    cost-effective for the company and suitable for
    the customer.
  • Enables business process re-engineering CRM
    programmes enable a company to have an insight of
    individual customer and helps in assessing its
    profitability for the company. The company may
    subsequently redesign its offer to various
    customers as per their profitability for the
    company and can, thus, re-engineer their business

Strategic Issues in Relationship Marketing
  • Still relationship marketing appears to be an
    expensive alternative to firms practising mass
    marketing due to the relatively high initial
    investments. Firms would adopt relationship
    marketing only if it has the potential to benefit
    them. The benefits come through lower costs of
    retention and increased profits due to lower
    defection rates (Reicheld and Sesser, 1990).
  • In the context of service, relationship marketing
    has been defined as attracting, maintaining and
    in multi-service organisations, enhancing
    customer relationships (Berry 1983).
  • Here, attracting customers is considered to be an
    intermediary step in the relationship-building
    process with the ultimate objective of increasing
    loyalty of profitable customers.

Strategic Issues. . . Contd.
  • Berry (1983) recommended the following five
    strategies for practising relationship marketing
  • Developing a core service around to build a
    customer relationship
  • Customizing the relationship to the individual
  • Augmenting the core service with extra benefits
  • Pricing services to encourage customer loyalty
  • Marketing to employees so that they perform well
    for customers.

Strategic Issues. . . Contd.
  • Although customised and off-the-shelf
    technological solutions are available in the
    marketplace, businesses need to do a lot more
    than just adopt these solutions to implement
    Customer Relationship Management (CRM) practices.
  • Successful implementation of CRM requires a
    strategic approach which encompasses developing
    customer-centric processes, selecting and
    implementing technology solutions, employee
    empowerment, customer information,
    knowledge-generation capabilities to
    differentiate them, and the ability to learn from
    best practices.

CRM Success Factors
  • Several studies brought forth the need,
    importance and enlistment of factors contributing
    to success of Customer Relationship Management
    programs. Recent researches focused hugely on
    success factors. Many publications of researchers
    and practitioners have addressed the area of CRM
    success factors few of them are presented below
  • Good hue et al. (2002) provided four general
    success factors
  • top management support,
  • vision,
  • willingness to change processes,
  • willingness to share data.

CRM Success Factors. . . Contd.
  • Wilson et al. (2002) described five groups of
    success factors within which he identified
    specific factors for success
  • determine the intent,
  • access the context,
  • describe content,
  • construct intervention process and
  • manage intervention process
  • Siebel (2004) found the CRM success factors as
  • Integration of back office processes
  • software customization,
  • clear communication of the CRM strategy.

CRM Success Factors. . . Contd.
  • Chen and Chen (2004) found following as critical
    success factors for CRM
  • top management,
  • systems integration,
  • knowledge management and
  • alignment of IT.
  • King and Burgess (2007) presented following CRM
    success factors
  • Top management support,
  • communication of CRM strategy,
  • KM capabilities,
  • willingness to share data / processes,
  • technological readiness,
  • cultural/customer change,
  • process change, and
  • system integration capabilities.

A typical customer service process
CRM Comprehension
  • A services company's marketing programme consists
    of the offers, tangibles, service delivery,
    employee behaviour, and grievance handling. When
    these get exposed to customers, they evaluate the
    whole process.
  • This customer evaluation process is done based on
    customer's expectation from the service and its
    perceived performance. Customer's cognitive
    ability plays an important role in this process.
    If perceived performance is more than that of
    customer expectation, it results into customer
    satisfaction which has a lot of advantages
    associated with the company such as repeat
    purchase, customer retention, cross-sell and
    up-sell. If perceived performance is less than
    that of customer expectation, it leads to
    customer dissatisfaction and results into a
    behaviour that is detrimental to the company's
    interest as negative publicity, loss in sale and
    so on.

CRM Comprehension. . . Contd.
  • Repeat purchase
  • Customer retention
  • Positive referral
  • Cross-selling up-selling

Perceived Performance(PP)
Customer Satisfaction
Companys Marketing Program
Physical Facilities
Customer Cognitive Ability
When PPgtCE
Service Delivery
Employee Behavior
When PPltCE
Grievance Handling
Ø Negative Publicity Ø Loss in Sale Ø Customer
Customer Dissatisfaction
Customer Expectation(CE)
Customer Evaluation Process
Components of CRM Programme
  • Company's marketing programme This consists
    of five important determinants of the company's
    offering, viz. the offer, tangibles, services
    delivery, employees and their approach
    towards customers and its requirements, and
    the company's grievance handling mechanism.
  • Customer expectation The expectation created
    by the company about the service also plays an
    important role in satisfaction determination. If
    hype is created about the product, customers tend
    to expect more and if the expectation is not
    fulfilled, it leads to greater dissatisfaction.
    The same level of service may at one point in
    time result into satisfaction but at another
    point in time may lead to dissatisfaction. This
    depends upon what service expectation level it
    generates in the minds of the customers.
  • Perceived performance This is largely guided
    by the customer's cognitive ability. So, it
    is important for the companies to realise that
    the service has got not just to be the best but
    it has to be perceived as the best as well. It is
    this perception of the service that determines if
    it would lead to satisfaction or dissatisfaction.

Components. . . Contd.
  • Competitors' offers These play an important
    role in determining customer satisfaction. They
    normally act as a benchmark for measuring the
    strength of the offer, i.e. the cost, the service
    guarantee, the fringe benefits etc. The growing
    service level of the competitor also increases
    the service expectation of the customer. If it
    remained at the same service level it might
    experience loss of sale not because of its
    lowering of services but by the increase in
    service level of competitors.
  • Customer's resultant behaviour Based on the
    analysis of the components discussed above, the
    customer would decide upon his further behavior
    regarding the company and its offers. One option
    could be that he may become the brand ambassador
    in addition to the regular benefit he delivers to
    the customers, the other extreme may be that he
    starts propagating negative publicity about the
    company and its offers.

CRM Value Chain
  • To achieve success through CRM, a CRM value chain
    needs to be designed. By this, data received from
    customer could be converted into meaningful
    information. These information may help companies
    acquire knowledge about the customer and design
    their relationship programs to create customer
  • Customer data Customer information
    Customer knowledge Wisdom to
    satisfy CRM Value Chain
  • As per the above sequence of activities,
    initially data regarding the customers is
    gathered, then it is converted into meaningful
    format depending objective and usability of the
    company. A compilation of only those data which
    has got significance for the organisational
    decision making is put forth. A set of knowledge
    is then required to be created and CRM program is
    designed accordingly.

CRM Process A Historical Perspective
  • CRM has long been practiced by the services
    sector players, but in a different format. That
    practiced was constrained by certain factors
    which are mentioned below
  • Unorganised and Unstructured The practice of
    relationship marketing has always been there, but
    was unorganised and unstructured, i.e. it did not
    follow any set pattern. It was highly spontaneous
    in nature. It did not follow any specific trend
    resulting out of a structured format.
  • CRM at individual discretion This has been
    another limitation of the older form of
    relationship marketing. The degree of care would
    be given to a customer not depending upon his
    value to the organization but upon the
    relationship he is able to develop with the
    person sitting behind the desk. So, this was
    relationship of another kind. A bank clerk may do
    the required job of a customer if he knows him
    and may let a high value customer wait if he is
    not known to him. Similarly, a restaurant waiter
    may offer a degree of personalness to customers
    not in proportion to his profitability to the
    restaurant but to himself, i.e. the tip he gets
    from the customers.
  • A restaurant may offer a discount to a low value
    customer if he has asked for and may not offer
    that to a high value customer if he did not ask
    for. In a general insurance company, a low value
    customers (having only a car of average value)
    claim might be settled in a week and dealt on
    priority because his agent was having good
    relations with the companys employee and a
    comparatively high value customer owning number
    of cars that too of high value, might be ignored
    and those claim settlement takes longer time
    because his agent is not as befriend with the

  1. Restricted to smaller group of customers Since
    individuals have memory constraints, one cannot
    offer the same set of relationship attributes to
    everyone as it is not possible for individuals to
    know. This restricts the effective and successful
    practice of CRM to a larger set of customers. For
    a hotel, it is difficult to always identify what
    is the colour of the bedsheet the customer
    prefers in the room or which is the flower he
    would like to be greeted with or whether he
    prefers tea or coffee in the morning.
  2. Confined to specific trade In the absence of a
    clear set of CRM programme, it is not possible to
    derive the expected result where the customers
    are in masses. The unstructured relationship
    marketing exercise may work only in cases where
    the customers are very small groups and all the
    individual information can be placed easily.
  3. No technological support There was absence of
    any technological tools to support the affairs of
    relationship. Unlike modern CRM softwares and
    sophisticated hardwares, the retailers in
    unorganized sector largely used to maintain a
    copy (Bahi-Khata) to enter the records of all the
    transactions, especially in the case of all
    credit purchases. That was the only record they
    had about the purchase history and pattern of the

CRM Process Modern Variables
  • There can be a standard process suggested to
    implement CRM in service organisations. It
    consists of the following steps
  • Customer Segmentation
  • Every customer is not equal to the company. They
    differ according to their profitability to the
    company. An analysis of the revenue and profit
    contribution of customer base of banks in the US,
    Europe and Australia showed
  • The top 20 of the customers contribute to 150
    of the profits while the bottom 20 drain 50 of
    the profits and the rest 60 just break even.
  • The experience of Indian banking industry is on
    similar lines. In a large public sector bank, the
    top 23 of the customers contribute to 77 of the
  • Hence, some conditions which has got strategic
    significance with customer need to be defined. To
    perform this process effectively, a customer
    matrix analysis may be conducted.

Customer matrix analysis
Future Potential Margin
Past Margin
CRM Process. . . Contd.
  • Customer Life Time Value
  • There has to have a basis for defining the
    customers of the company. Not all customers
    should be treated as equal. Company should first
    decide who the profitable customers are, what the
    requirements of these customers are, and how best
    the companies can serve them. This may help
    companies allocate sales resources and service
    design to the customers. A big question here is
    how the company decides who the profitable
    customers are. The most widely accepted practice
    for identifying profitable customers is
    calculating the customer's lifetime value. It is
    important because every service comes with a
    cost. So, the organisation should conduct a
    comprehensive cost-benefit analysis and
    accordingly, needs to prepare a customer databank
    depending upon the customer lifetime value to the
  • New contact strategies Insight into customer
    histories and contact preferences is essential to
    re-engineering the customer experience and
    maximise the value of each interaction.

CRM Process. . . Contd.
  • Customer Service Cost
  • It refers to developing a detailed and accurate
    picture of what it really costs to execute
    current sales and service models by the customer
    segment. Care needs to be taken to assess the
    cost of the service being proposed to be offered.
  • Cost-Revenue Parity
  • Organisations need to determine service levels to
    be offered to the customer's needs and
    profitability as defined by the strategy. This
    largely means offering services to the customers
    through technology-based tools as SMS, phone or
    internet while reserving costlier support options
    for the more valuable customers and transactions

CRM Process. . . Contd.
  • Employee Motivation
  • Given that labour costs make up for more than 60
    of a contact centre's operating budget, the right
    organisational structure and performance tools
    are especially important for optimising head
    count and for increasing agent proficiency and
    motivation. Employees need to be properly trained
    and educated about application of CRM programmes.
  • Sourcing Models
  • Effective partnering through outsourcing and
    "co-sourcing" is critical in transforming the
    economics of customer interaction. Even banks may
    decide on which service to carry out on its own
    and which to outsource. This outsourcing, at
    times, helps in optimising cost offering a
    flexible alternative to traditional CRM
    investment models by lowering the fixed to
    variable cost ratio in customer sales care.

Designing a CRM Implementation Model
  • Success of a CRM program depends on how well it
    is designed and implemented. The CRM process
    lacks a standard universally acceptable model.
    Finding a standard process for practicing CRM is
    the key issue for its success. The following is
    the process proposed for effective and successful
    implementation of CRM in an organization. The
    process goes in the sequence shown in figure

Designing a CRM. . . Contd.
  • Customer segmentation based on CLV Since all
    customers are not equal, segmentation is a must.
    But certainly, there has to have a basis for
    segmentation of customers. In CRM, the customer's
    lifetime value for the company acts as the most
    prudent basis for segmentation.
  • Customer profiling After segmentation, customer
    profiling needs to be conducted and the basic
    customer information, tastes, preferences, buying
    habits, likings and dislikings and all the
    informations of significance about the customers
    need to be stored in such a manner that the same
    can be used effectively for all the business
    customer- interest purposes.
  • Offer customisation After studying the specific
    customer require ments, the company's offers are
    so designed that they meet the exclusive needs of
    the customers.
  • Matching service cost and revenue An important
    factor needs to be taken care of while designing
    the offer is that the offer should in no way be
    more that the corresponding benefit coming out of
    the customers.

Designing a CRM. . . Contd.
  • Employee participation in CRM design Another
    very critical factor in the design of CRM is
    participation of the employees through
    their opinion, views and suggestions as it is the
    employees only who ultimately have to deal with
    the customers and face the implication of the
    proposed CRM programme. The practicality and
    implementability of the programme needs to be
    seen from the perspective of employees.
  • Motivating employees for effective
    implementation Since it is the employees only
    who are entrusted with the responsibility of
    effective implementation of the CRM programme
    they need to be adequately motivated.
  • Making CRM an enterprisewide activity CRM, in
    many of the organizations, is considered as a
    marketing function, hence loses the real benefit.
    CRM actually needs to be made and understood as
    an enterprise wide activity. All the people of
    the organization need to believe that their
    existence is because of the customers and their
    ultimate reason of existence is betterment of the

Designing a CRM. . . Contd.
  • Adequate technology support for CRM
    implementation Adequate technology support also
    needs to be arranged for successful
    implementation of the CRM programmes. These
    technological tools include hardwares and CRM
  • Consistency testing of CRM programmes
    Organisations many a time start CRM with a bang,
    but get engaged in the routine activity over a
    period of time. A very critical aspect in the
    success of CRM programme is its consistency in
    practice. A mechanism needs to be devised to keep
    checking the system if it is responding as per
    the schedule.
  • CRM practice evaluation To verify how successful
    is the implementation of the CRM programmes,
    regular feedback mechanism needs to be devised.
    This feedback has to be from the following
  • (i) Customer experience perspective
  • (ii) Employee participation perspective

Project Assignment
  • Prepare a case study of Airtel, a leading mobile
    service operator of India, and study its CRM
    practices. Also, enlist the advantages that
    Airtel has garnered for itself on account of
    superior CRM practices.
  • REVIEW Questions
  • Critically define the meaning of Customer
    Relationship Management.
  • What reasons do you attribute to the increased
    implementation of CRM in business organisations?
  • "Superior customer service would be the only
    differentiator in the coming days." Comment.
  • "CRM brings in lots of advantages to the
    organisation". What are those advantages and what
    could be their future?

  • Companies are stuck with the problem of how to
    implement CRM designed by the company and also
    whom to apply it. Another issue that haunts the
    marketing manager of these companies is how the
    left out customers react and behave to the
    differential treatment while segmenting. As a
    marketing manager of a telecom service provider,
    how would you design the CRM value chain and
    implement the CRM?
  • Why is it necessary to keep the customers in good
  • What do you mean by CRM process? Discuss in
  • What are the essentials of a CRM programme?
  • What is customer matrix analysis?
  • What do you mean by CRM value chain? Explain.