Session 2 evolution of crm

1. CRMCRM

2. EvolutionEvolution
Initially, there were Door-to-Door sales forces to approach the
customers.
Then, Mass marketing replaced the intimacy of a direct sales
force.
Later, Targeted marketing evolved. Use of direct mail and
telemarketing.
Latest is Customer Relationship Management (CRM), the next
step in Evolution. A concept supported by latest technologies.

3. EVOLUTION OF CRMEVOLUTION OF CRM
1980’S
•Focus on Data Mining and
Direct Marketing was the
outcome
1990’S
•Focus on loyalty programs
2000’S+
DATABASE
MARKETING
RELATIONSHIP
MARKETING
CUSTOMER
RELATIONSHIP
MARKETING

4. Defining CRM…Defining CRM…
CRM is about how you attract, develop and retain
customer.
Customer Focus; Customer acquisition, Customer
research, Customer loyalty, Customer development,
Customer satisfaction, Customer value,

5. What is CRM all about…..What is CRM all about…..
CRM promises to help companies to get to know their
customers.
CRM helps an organization to understand which
customer to retain and which ones they should be willing
to lose- and why?
Overall helps in targeting, spending money wisely,
saving time & customer satisfaction.
CRM is how to differentiate customer treatment
according to individual preferences.

6. Why CRM…..Why CRM…..
Customers are fickle and becoming more cynical.
We no longer believe what we read and see.
Convergence of markets.
Competition- leader or follower?
Customer loyalty at any cost.

7. GOALS OF CRMGOALS OF CRM
Provide better customer service
Cross sell products more effectively
Helps sales staff
Simplify marketing and sales processes
Discover new customers and new customer needs
Increase customer revenue

8. Defining CRMDefining CRM
Dr. Robert Shaw (as cited in Customer
Relationship Management, 2001) provides a
more thorough definition of CRM.
Customer relationship management is an
interactive process for achieving the optimum
balance between corporate investments and the
satisfaction of customer needs to generate the
maximum profit.
[email protected]
NIFT Bangalore

9. Defining CRMDefining CRM
Measuring both inputs across all functions
including marketing, sales and service costs
and outputs in terms of customer revenue,
profit and value.
Acquiring and continuously updating knowledge
and customer needs, motivation and behavior
over the lifetime of the relationship.
[email protected]
NIFT Bangalore

10. Defining CRMDefining CRM
Applying customer knowledge to continuously
improve performance through a process of
learning from successes and failures.
Integrating the activities of marketing, sales
and service to achieve a common goal.
[email protected]
NIFT Bangalore

11. CRM: A Customer-centric business strategyA Customer-centric business strategy
A Customer-centric business strategy which
Focuses on Managing and optimizing entire
customer life cycle.
Demand re-engineering of work processes
with customer in focus.
It consists of 3 phases
Planning Phase
Assessment Phase
Execution Phase

12. In-depth analysis of
customer behavior and
attributes.
Applying of the achieved
knowledge in the
formulation of marketing
campaigns, strategies and
treatment plans.
More than just a set of
technologies – it is a
process.
[email protected]
NIFT Bangalore

13. Benefits of CRMBenefits of CRM
Company existence – quest for profit.
Three ways to increase the profitability of the customer base
Acquire more customers
Optimize the value of the existing customers
Retain the right customers longer
Acquiring new customer cost 5-10 times more that retaining the
existing one
Loyal customers will will buy more and are willing to pay premium
prices
20/80 rule – 20% of the customers generate 80% of the revenue

14. Continued…..
Service leaders enjoy the following advantage over their low-
service competitors:
 They grow twice as fast.
They experience a 6% annual growth vs. a 1% share loss (they
take customers away from their competitors).
They can charge 10% more from their products and still take
customers away.
They enjoy 12% vs. 1% average return on sales.
Industry statistics show that 68% of customers walk away
because of poor customer service.
[email protected]
NIFT Bangalore

15. Evolution of CRMEvolution of CRM
Mass Marketing
Target Marketing
CRM

16. Mass MarketingMass Marketing
Replaced the intimacy of direct sales
One way communication
Wide geographic distribution
Lost is the personal touch with the
customer
Mass marketing was enabled trough the
technological improvements in TV, radio,
printed press

17. Target MarketingTarget Marketing
Direct mail, telemarketing
Receiving customer response
Lack of specific data, average response rate
Islands of information

18. CRMCRM
Next evolutionary step, back to intimacy
Customer loyalty build on:
Understanding of customers wants, needs and values
Interactivity with the customer in the way customer prefer

19. Evolution of Customer Relation Evolution of Customer Relation
over timeover time
 Customer relationship management is an
attempt to modify customer behavior over
time and strengthen the bond between the
customer and the company.
The key to CRM is identifying what creates
value for the customer and then delivering it
(Newell, 2000).

20. Evolution of customer relation over time
V
a
lu
e

o
f

c
u
s
t
o
m
e
r

r
e
la
t
io
n
Evolution of customer relation over time
Customer
Acquisition
Acquire the „right“
customers with
high potential
value
Customer
Development
Cross- and up-
sell by offering
the right products
at the right time
Customer
Retention
Retain profitable
customers and
increase their
long-term value

21. CRM CycleCRM Cycle
Assess
Who are the customers – demographics and lifestyle?
Where do they live?
What are they worth? What is their lifetime value potential?
What and how do they buy?
How can they be reached? How have they responded to
promotions in the past and trough which channels they
prefer to be reached?
Plan
Execute
Execution and management of the marketing campaigns
and customer treatment plans.
Data gathering.

22. CRM Critical Success FactorsCRM Critical Success Factors
Architecture
Data warehouse
Data structure and architecture – 80% of the
service cost
Analysis, Analysis,
ProfilingProfiling
Customer InteractionCustomer Interaction
Sales force automation system.Sales force automation system.
Call centerCall center
The InternetThe Internet
Analysis,
Profiling
Customer Interaction
Sales force automation system.
Call center
The Internet

23. Planning PhasePlanning Phase
Plan to approach the customers
Plan for making new campaigns
This phase includes
Marketing tools
Various Softwares
Marketing & Sales personnel are involved in this
phase

24. Assessment PhaseAssessment Phase
Select customer base for analysis
Analyze customer requirements
This phase includes technologies like
Data warehousing
Data Mining
Online analytical processing (OLAP)
 A certified personnel sets up the CRM package
while a business analyst analyzes the data

25. Execution PhaseExecution Phase
Customer interaction
Executes campaigns
Track customer feedback
This phase uses
Internet
Call centers
Direct mails etc.

26. Technology behind Assessment Phase
Data
Mining
Data
Warehouse
OLAP
Server
Warehouse
containing
Customer data.
Multidimensional Structures
to facilitate better and fast
analysis of data.
Integrates with Data Warehouse &
OLAP to implement intelligent
algorithms to discover patterns.
User analyzes these
patterns to take decisions
suitable for his business.

27. DATA WAREHOUSING
A data warehouse is a copy of transactional data.
Data is specifically structured for querying and reporting
A data warehouse can be a relational, multidimensional
hierarchical database or a flat file.
DISTINGUISHABLE FEATURES
• Contains historical data
• No frequent updates
• Data stored is subject oriented
TERMINOLOGY
Data Mart- Contains data about a specific subject.
Metadata- Describes the data stored in data warehouse.
Data Cleansing- The process of ensuring that all values in a dataset
are consistent and correctly recorded
ETL- Extraction, Transformation and Loading of Data.

28. A Typical Data Warehouse
Data Warehouse
Detailed Data
Data
Mart
Data
Mart
Data
Mart
Summarized Data
Meta Data
Data about data.
Facilitates in firing
queries on
detailed data.
Data marts contain
data specific to a
subject.
customer campaign sales
[email protected]
NIFT Bangalore

29. OLAP
•Online analytical processing is the name given to database and
user interface tools that allow to quickly navigate within data.
•Provides a mechanism to store the data in multidimensional
cubes.
DISTINGUISHABLE FEATURES
•Multidimensional Cubes- To store data which are multidimensional in
nature.
•Calculation Intensive- Allows complex calculations on database.
[email protected]
NIFT Bangalore

30. CRM-Related TermsCRM-Related Terms
eCRM
CRM that is Web-based
ECRM
Enterprise CRM
PRM
Partner relationship management
cCRM
Collaborative CRM
SRM
Supplier relationship management
[email protected]
NIFT Bangalore

31. Reference books
CRM, Seth, Parvatiyar & Shainesh
CRM Briefcase book; Kristen Anderson & Carol Kerr
CRM; Paul Greenberg
CRM; J.N.Seth

32. Thank youThank you