CRM Notes MBA 4th Semester

CRM: Migration from Suspect To Advocate

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Chapter-1

Introduction to CRM Developing close, cooperative relationship with customers is the requirement of modern business organizations. In the current era of intense competition and demand oriented markets, there is paradigm shift in the marketing strategies of business organizations, which were earlier focused on product/service called as product/service centric approach but now it has been shifted to customer centric approach. Due to this customer centric approach of marketing, Customer Relationship Management (CRM) has attracted the attention of marketers in order to focus on cooperative and collaborative relationship between the firm and its customers. This type of relationship is necessary from both growth and customer loyalty perspective of organization. Now a days CRM has become a globally recognized business practice CRM means many different things to different people. It is possible to develop a greater understanding of it by looking at its origins and the principles that drove its development. In the marketing literature the term Customer Relationship Management is defined in different manner by different market researchers and academicians According to Shani and Chalasani(1992), defines Customer Relationship Management 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 long period of time” Another Narrow perspective of Vavra(1992), CRM is customer retention in which a variety of after marketing tactics is used for customer bonding or staying in touch after the sale is made. According to Gronroos, CRM is marketing strategy to establish, maintain and enhance relationship with customers and other partners, at a profit so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfillment of promises. We define CRM as Customer Relationship Management as a comprehensive marketing strategy to improve marketing productivity which can be achieved by increasing marketing efficiency and enhancing marketing effectiveness through a process of acquiring, retaining and partnering with selective customers to create superior mutual value for the parties involved. As implied in the above definition, the objective of CRM is to create superior mutual value for both the business organizations and the customers. This will help in improving marketing productivity which is achieved by increasing marketing efficiency and by enhancing marketing effectiveness. The aspects, marketing efficiency and effectiveness have long term orientation for an organization as it is concerned with cooperative and collaborative relationship between the firm and its customers and other marketing actors.

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Emergence of CRM Looking back at a snapshot history, we see the following clear developments and progression in marketing strategies over the last four decades: • 1960’s: Era of Mass Marketing, is market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. It is type of marketing of a product/service to a wider audience. The idea is to broadcast a message that will reach the largest number of people possible. Traditionally mass marketing has focused on radio, television and newspapers as the medium used to reach this broad audience. By reaching the largest audience possible exposure to the product is maximized. In theory this would directly correlate with a larger number of sales or buy in to the product. As the name says it’s mass so your trying to get your as many as you can. • 1970’s: Era of Segmentation, Market segmentation divides a market for goods or services into distinct subdivisions. It takes a vague undistinguished group of consumers and uncovers those who have similar needs, those who make purchases or use products or services in the same. A market segment is a subgroup of people sharing similar consumer characteristics. And because each segment shares the same attitudes and behaviors, they generally respond the same to a given marketing strategy. • 1980’s: Era of Niche Marketing, is a marketing strategy where a subset of the market in which a specific product is focused with a price range, production quality and the demographics aimed at specific market needs thereby intended to impact. • 1990’s: Era of Relationship Marketing, It is a strategy designed to foster customer loyalty, interaction and long-term engagement. It is designed to develop strong connections with customers by providing them with information directly suited to their needs and interests and by promoting open communication. This approach often results in increased word-of-mouth activity, repeat business and a willingness on the customer’s part to provide information to the organization. Year 1960 1970 1980

Era The Era of Mass Marketing The Era of Segmentation The Era of Niche Marketing

1990

The Era Marketing

of

Apporach Transactional Marketing

Relationship Relationship Marketing

Table 1.1 – Evolution of CRM As it is implicit that upto 1980’s the firms were focused towards Transactional Marketing, which is wholly concerned about the promotion and selling of the product with little or no concentration over customer value and satisfaction and try to make new customers every time. But the present scenario is totally changed; there is paradigm shift from Transactional Marketing Approach to Relationship Marketing Approach which is

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all about building and maintaining the long term customer relationship, creating a sense of loyalty by providing the value product and service for mutual benefit.

Transactional Marketing Approach

Relationship Marketing Approach

Figure 1.1 – Migration Towards Relationship Marketing

Difference between Transactional Marketing and Relationship Marketing Transactional Marketing Relationship Marketing Focus on Single Sale recruitment Emphasis on product features

Focus on retention of the customer Emphasis on product benefits and systematic solutions It is short term oriented It is long term oriented Little or no importance given to customer Customer service is taken as most services important element Limited commitment towards the Higher commitment towards the customers customers Focus on product quality while production Focus on quality at all levels Communicate to persuade Communication to make sense and meaning Functional, mechanistic and production More humanistic and relationship based oriented business model business model Goal is customer satisfaction Goal is customer delight It Serves 4Ps of Transactional Marketing It Serves 8C’s of Relationship Marketing 1. Product 1. Customer Expectation 2. Price 2. Customer Satisfaction 3. Place 3. Customer Delight 4. Promotion 4. Customer Cooperation 5. Customer Retention 6. Customer Touchpoints 7. Customer Behaviour 8. Customer Collaboration Table 1.2: Transactional Marketing Vs. Relationship Marketing

Paradigm Shift from 4P’s of Transactional Marketing to 8C’s Relationship Marketing 4

This figure shows that 4P’s which earlier took an important place in marketing strategies has changed to Customer Centric approach which are based upon expectation, satisfaction, delight and cooperation etc.

4P’s Transactional Marketing

8C’s Relationship Marketing

1. Product

1. Customer Expectation

2. Price

2. Customer Satisfaction

3. Place

3. Customer Delight

4. Promotion

4. Customer Cooperation 5. Customer Retention 6. Customer TouchPoints 7. Customer Behaviour 8. Customer Collaboration

Principles of CRM CRM in effect implies building long term relationship with customers and understanding their needs and responding through multiple products and services through multiple channels. CRM should finally enable “a targeted mutually beneficial profitable relationship with individuals and groups” Differentiate Customers Differentiate Offerings Keep Existing Customers Maximize Lifetime Value Increase Loyalty

Key CRM Principles

1. Differentiating Customers: Most CRM systems allow for very little freedom to customize to specific industry verticals. Since the customer needs emerge from the products and offering of the industry, CRM system should respond to the customer needs. Understandings each customer becomes particularly important. And the same customer reactions to a cellular company operator may be quite different as compared to a car dealer. Besides for the same product or a service not all customers can be treated alike and CRM need to differentiate between a high value and a low value customer.

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2. Differentiate Offering: A CRM solution needs to differentiate between a low value customer and a high value customers. • Low value customer requiring high value customer offerings. • Low value customer requiring with potential high value in near future. • High value customer requiring high value service. • High value customer requiring low value service. 3. Keep existing customers: Grading customers from very satisfied to very disappoint shall help the organization in always improving its customer satisfaction levels and scores. As the satisfaction level for each customer improves so shall the customer retention with the organization. 4. Maximizing life time value: By identifying life stage and life event trigger points by customer, marketers can maximize share of the 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. 5. Increase Loyalty: It is an endeavor of any corporate to see that its customers are advocate for the company and its products. 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 advocate on the loyalty curve.

Suspect →Prospect→Customer Client→Supporter→Advocate Cost of Acquiring Customers Acquisition is a vital stage in building customer relationship. Certain key issues connected with customer acquisition are dealt here. The customer acquisition cost is defined as the cost associated with convincing a consumer to buy your product or service, including research, marketing, communication, and differentiation costs etc. In simple words, it is the cost associated with acquiring new customers. Most businesses focus on organic growth as the path to long term success and that means adding new customers and growing their base. For the purpose of customer acquisition an organization is likely to focus its attention on the following as its major sources for providing input for acquisition.  The suspects  The enquiries  The lapsed customers  The former customers  The competitor’s customers  The competitor’s lapsed customers  The competitor’s former customers  The referrals  The existing buyers The suspect represents the segment of the market who have the potential to become prospective customers. Enquiries whether they are intentional or casual provide for a

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focused approach in the process of acquisition. Proper responses to enquiries are likely to result in customer acquisition. The lapsed customers should not be neglected. They can be booked as new customers if the reasons for lapses are rectified suitably. The reasons for lapses are dealt under the recovery of lapsed customers. Once a customer has purchased something to fulfill a specific need and has then stopped buying from an organization be become a lapsed customer and he should be encouraged to become customer again, by marketing the organization’s new offerings to fulfill the customer’s emerging new needs and so on. The competitor’s customers, competitor’s lapsed customers, competitor’s former customers and competitor’s enquiries are major attractions for acquisitions. Customer who always prefer more values for every time, are naturally inclined to opt for alternatives. In the context the competing organizations can acquire the competitor’s customers if the customers perceive that they would be rewarded with more value for money. Referrals play a significant role and provide a strong base for new customer acquisition. It is likely that fresh customers will rely heavily on referrals rather than the organization’s own promotion efforts. Referrals may be from within the organizations or from anyone outside connected to the organizations including suppliers, bankers, consultants etc. Existing buyers may also be targeted for acquisition in the event of the organization expanding its product line.

Process of Acquisition The acquisition process constitutes the following stages: 1. Enquiry 2. Interaction 3. Exchange 4. Coordination 5. Adoption In this stage, the prospective buyer undertake a detailed enquiry with regard to several aspects pertaining to the organization, product, nature of transaction and all other related aspects. Having stored the information he passes on to the interaction stage, where the customer interacts with the organization and obtains additional information, clarifies and ensures already connected information. Terms of exchange, mode of delivery and other things related to exchange are settled at the exchange stage. Further coordinated effort on either side would lead the customers moving to adoption of the product or service concerned and that completes the acquisition process.

Influences of Acquisition The application of the acquisition process explained above is influenced by the following:  Type of buying  Type of product  Type of customer  Economic environment  Contextual operations There are two different types of buying: one, the rational and the other, emotional. Rational buying is a more systematic buying influenced by reason and logic. On the other hand, emotional

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buying is influenced by the emotions of the buyer. It is likely that a customer involved in the rational buying would move from one stage to another systematically, whereas in emotional buying he may not do so. Acquisition depends on the type of product, whether it is convenience, shopping or speciality product. According, the significance of each stage of the acquisition process varies. Further the significance depends on the type of customer whether the customer is an individual or an organization. In contrast to the individual buyer an organization may have its own procedures to adopt a product, policy and the related aspects. Also acquisition depends on whether the acquisition is a first time experience or a repeated one. The economic and environmental forces focus attention on the market conditions, the operations of the competing forces, supply and demand, purchasing power etc. The acquisition process is likely to differ under conditions of limited availability of product, with limited brand choice and limited purchasing power as compared to unlimited availability of brands and purchasing power. The context of operations refers to the prospective buyer’s intention, urgency, previous experience, specific benefit expected, lifestyle of customer and so on. The acquisition process is likely to differ as per the context of operation concerned. Acquisition is the act of gaining new customers through various different methods with the goal of turning potential customers into actual customers. This is a very difficult stage because with so much competition around today, customers are inundated with choices meaning that competition is fierce and customers are more informed. As a result of this people have become more demanding as they know that they have the upper hand. However, this is a very important step in marketing because for most businesses the only way they can grow is through the acquisition of new customers. There are various methods of achieving this from finding customers who weren't previously aware that the product was available to people who may not have needed the product before maybe needing it now. For example pet food someone who didn't previously have a pet but then bought a cat would suddenly need to buy cat food. There are several different methods of achieving customer acquisition such as mass marketing which includes magazines and billboards and direct marketing such as telesales and through the post.

The total cost of customer acquisition varies from situation to situation but has some of the basic components, which includes: 1. Marketing cost a. Online marketing cost b. Offline marketing cost 2. Resources cost a. Infrastructure b. Manpower c. Expenditure on office equipments and stationary d. Electricity e. Internet 3. Expenditure incurred on training and market research Although winning new customers is extremely important customer retention is crucial to the life of any business. As it costs considerably less to retain a customer than it does to win new ones, focusing on a retention strategy makes perfect business sense. Studies across a number of industries have revealed that the cost of retaining a customer is only

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about 10 percent of the cost of acquiring a new one. The main aim of customer retention is to prevent customers from swapping to competitors and to increase customer loyalty and profitability. Some of the many advantages of customer retention are that long - term customers are less likely to stop using your product or switch to a competitor, they tend to be less price sensitive, they may introduce new customers through referral, they're more likely to purchase additional products, are less expensive to service because they are familiar with the process and are consistent in their buying behaviour. CRM involves using software applications that allow companies to manage every aspect of their relationship with a customer and thus turning customer satisfaction into customer loyalty and building longer lasting relationships.

Turning customer acquisition in to customer loyalty Loyal customers are addressed by different name by different organizations like premium customers, key accounts, elites and crown jewels. The term customer loyalty means commitment or attachment to a product, brand, a store based on favorable attitudes and is reflected purchases or recommendations to others. Richard L Oliver has defined loyalty as “A deeply held commitment to re-buy or repatronize a perfect product or service consistently in future despite situational influences and marketing efforts having the potential to cause switching behavior” Customer loyalty can be loosely defined as the predisposition of any given customer to purchase your goods or services over comparable ones available in the marketplace. When speaking of products (rather than services or the broader classification which includes both) it is often referred to as "brand loyalty." Investing time and energy in promoting customer loyalty should be an integral component of any business' marketing strategy. When business people think of "marketing" in general, they tend to focus on activities targeted at attracting new customers. While expanding your business' customer base is a crucial undertaking which you must work towards with clearly defined goals, the importance of retaining existing customers mustn't be overlooked. Working toward promoting customer loyalty (or brand loyalty) is critical to your goal for many reasons. A few of the most important reasons why customer loyalty is important to your business are outlined below. 1. Repeat Business: Loyal customers, almost by definition, will purchase your goods or services again and again over time. Depending on what type of business you have and what the sales cycle is like, you may end up selling more to one loyal customer in a year than you might to even 10 first time customers. 2. Greater Volume: As you build relationships with your loyal customers, it will become increasingly easy to sell to them in higher volumes. This may happen naturally, or you may choose to incentivize the process for your customers. In any case, higher volumes mean greater sales, which translates to higher overall profits. 3. Cross-selling Opportunities: Customers who exhibit brand loyalty have a relationship with your business. They trust you to provide quality products and customer service. This creates a great opportunity to fulfill more of your customers' needs than the traditional ones you currently meet. What does this

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mean? You can make sales to loyal customers across product lines and thus increase your overall sales volume without needing to focus so much on attracting new customers. 4. Protects You From the Competition: The more loyal your customers tend to be, the safer you will be from the draw of the competition. Establishing strong brand loyalty can make you practically immune to competitive forces. This is especially important in places where new players enter the marketplace often. 5. Word-of-Mouth Marketing: Loyal customers can also bring you new customers. Customers that have great relationships with businesses tend to talk about it. Happy and satisfied customers who keep coming back to you are very likely to refer others who may need your product and/or services. 6. Benefit of the Doubt: Let's face it; things go awry sometimes - even in the best businesses. Sometimes we get an order wrong, don't meet a deadline, or aren't able to deliver on promises made to customers. In today's economy, it's even easier for little hiccups such as these an others to take place in business. These types of mistakes can damage your business' reputation in the eyes of a new customer. A scheduling error can make your firm seem disorganized and unreliable. This is a very easy way to lose customers. The good news is, loyal customers are much more likely to give you the benefit of the doubt and/or overlook errors. If you maintain the level of customer service and quality that it takes to achieve brand loyalty in the first place, your customers will be willing to forgive you when bad things happen.

How to make customer loyal? There are few tips for making our customer loyal or to get repeat business 1. Add a human touch to your customer service : It is well known that most companies fail to provide adequate customer service. Just call nearly any 1-800 number and you will experience frustration as your call is transferred from one automated message to another. Do not let your customer get lost in a technological loop. Provide a means for them to contact you directly and answer them promptly. 2. Tell the truth, even when it’s not what the customer wants to hear : Sometimes freelancers have the mistaken impression that good customer service means always saying “yes”. They couldn’t be more wrong! Rather than agreeing to do something that you cannot really do, be upfront with your customer. In most cases your honesty will enhance your situation. Saying “no” upfront is a lot better than saying “yes” and then not delivering. 3. Being pleasant counts for a lot: My Wife and I recently ate at our favorite restaurant. Now the city where we live has dozens of restaurants. There are even three other restaurants located in the same mall. So why this is our favourite? a. The owner and employees greet by name and seem glad to us. b. They remember our preferences. “No lemon in your team mam” c. They remember details about our lives. d. How kids are doing? e. The food is good and the price is reasonable

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4. Become the quality provider: I once tried purchasing my children’s clothing at the cheapest possible price. However, after one very cheap little outfit that I purchased for my daughter fell apart after she wore it only one time. I changed my tactic. It dawned on me that quality is more cost effective in the end. 5. Be in constant touch with your customers and associate them in important aspects like new product development and also keep them informed of your new products and prices. 6. Reward the customer in appropriate manner for their loyalty. 7. Get to know the customer as much as you can . Simple gestures like sending birthday cards can emotionally bond the customer with the organization. 8. If a valuable customer suffers any disadvantage due to an transaction with you, compensate the customer

Internet and its effect on CRM The emergence of the Internet heralded a new opportunity for customer relationship building. For one thing, search engines made it easier for customers to find online merchants and interact with them. And once found, those merchants offered customer more streamlined ways of ordering and receiving products and services. Moreover the internet simplified bidirectional communication for the first time offering a better way for consumers to replay information to the merchant. Instead of waiting to be mailed a from to open an account or order a phone line, a prospective customer needed only to send an application through cyberspace resulting in shorter delivery time, improved accuracy and quite often a higher positive perception. Internet is an environment of zero latency, offering real time information and often on demand product delivery. Consider the old way. A customer needs a new set of window blinds. He goes to the kitchen, finds the yellow pages and calls his local blind company. The representative explains they can have someone come out and measure for the blinds a week from Thursday. The representative arrives from the blind company, measures and shows the customer photos of various blind styles and colors. Then the representative takes another two days to write up and estimate. Almost two weeks later the customer has the pricing information he needs. Now he must decide whether to get another estimate or take his chances with the only vendor he’s contacted. Compare that to the Web version. The customer enters mini blinds in his favourite search engine, which returns the web sites for several catalog window treatment firms. He chooses a company, which displays a series of blind designs and prices per inch. The customer chooses a design he likes, enters his window measurements and receives a price online, including tax and shipping. Before purchasing be browses a couple of other window ware websites for additional blind designs and prices, eventually placing his order in less than an hour.

Benefits to organizations 1. Global Reach: INTERNET expands the marketplace to national and international markets. With minimal capital outlay, a company can easily and quickly locate 11

the best suppliers, more customers and the most suitable business partners worldwide. Expanding the base of customers and suppliers enables organizations to buy cheaper and sell more. 2. Cost Reduction: INTERNET decrease the cost of creating, processing, distributing, storing and retrieving paper based information. High printing and mailing costs are lowered or eliminated. 3. Supply chain improvements: Supply chain inefficiencies such as excessive inventories and delivery delays can be minimized with INTERNET. For example by building autos to order instead of for dealers showrooms, the automotive industry is expecting to save tens of billions of dollars annually just from inventory reduction. 4. Extended Hours: The business is always open on the web, with no overtime and no other extra costs. 5. Customization: Pull type production allows for inexpensive customization of products and services and provides a competitive advantage for companies that implement this strategy. A well known example of pull type production is that used by Dell. 6. New Business Models: INTERNET allows for many innovative business models that provide strategic advantages and/or increase profits. Combining group purchasing with reverse auctions is one example of an innovative business model. 7. Vendor’s specialization: INTERNET allows for a high degree of specialization that is not economically feasible in the physical world. For example a store that sells only dog toys can operate in cyberspace but in the physical world such a store would not have enough customers (dogtoys.com). 8. Rapid time to market: INTERNET reduces the time between the inception of an idea and its commercialization due to improved communication and collaboration. 9. Lower communication costs: INTERNET lowers telecommunication costs-the internet is much cheaper than VANs. 10. Efficient Procurement: INTERNET enables efficient e-procurement that can reduce administrative costs by 80 percent or more reduce purchase price by 5 to 15% and reduce cycle by more than 50%. 11. Improved customer relations: INTERNET enables companies to interact more closely with customers, even if though intermediaries. This allows for personalization of communication, products, and services which promotes better CRM and increases customer loyalty.

Benefits to consumers 1. Ubiquity: INTERNET allows consumers to shop or perform other transactions year round, 24 hrs a day from almost any location. 2. More products and services: INTERNET provides consumers with more choices they can select from many vendors and from more products. 3. Customized products and services: Dell customizes computers and sells them at competitive prices. Customers can get an increased number of products and services just the way they want them.

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4. Cheaper products and services: INTERNET frequently provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons. 5. Instant delivery: In the case of digitized products, INTERNET allows for fast delivery. 6. Information Availability: Consumers can locate relevant and detailed product information in seconds, rather than days or weeks. Also, multimedia support is cheaper and better. 7. Participation in auctions: INTERNET makes it possible for consumers to participate in virtual auctions. These allow sellers to sell things quickly and buyers can locate collector’s items bargains. 8. Electronic communities: INTERNET allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.

Different Terms of CRM/Types of CRM 1. eCRM: Electronic CRM concerns all forms of managing relationships with customers making use of Information Technology (IT). eCRM is enterprises using IT to integrate internal organization resources and external marketing strategies to understand and fulfill their customers needs. Comparing with traditional CRM, the integrated information for eCRM intraorganizational collaboration can be more efficient to communicate with customers.As the internet is becoming more and more important in business life, many companies consider it as an opportunity to reduce customer-service costs, tighten customer relationships and most important, further personalize marketing messages and enable mass customization. ECRM is being adopted by companies because it increases customer loyalty and customer retention by improving customer satisfaction, one of the objectives of eCRM. 2. ECRM: When a company reaches a certain size, usually after management has been assumed by a board of directors, it begins to divide up company activities into different strategies. Some of these strategies govern marketing, or reaching out to consumers in an effort to win new customers. Other strategies involve CRM, or attempts by a company to hold onto customers it already has and increase market share through good opinions and word of mouth. CRM stands for customer relationship management. Enterprise CRM is simply a CRM strategy that is designed to change the way the business thinks about its relationship with customers, rather than continue with traditional approaches to customers. CRM is designed to attract customers by increasing product value and paying attention to personal preferences. Several "pillars" are essential to all CRM strategies, including sales, marketing, customer service and technology. CRM sales are designed to appeal to existing customers who can be offered better deals for their continuing loyalty, while marketing techniques are designed to remind customers of the benefits they get from the products or services the business offers. CRM technology keeps track of customer habits so customer service techniques can be adapted to each person.

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3. PRM: Partner relationship management (PRM) is a business strategy for improving communication between companies and their channel partners. Webbased PRM software applications enable companies to customize and streamline administrative tasks by making shipping schedules and other real-time information available to all the partners over the Internet. It allows a company to manage its alliance partner and reseller relationships to provide customers with the optimal sales channel while streamlining the sales process. Determining incentives for various web referral sites based on the profitability of the customers they send your way is one PRM tactic. Several CRM providers have incorporated PRM features, such as Web-enabled spreadsheets shared through an extranet, in their software applications. PRM is often compared to customer relationship management (CRM) and there is some argument over whether the complex relationships of channel partnerships, makes it necessary for PRM to be a separate entity, or merely a component of CRM 4. cCRM: Collaborative CRM is an approach to customer relationship management (CRM) in which the various departments of a company, such as sales, technical support, and marketing, share any information they collect from interactions with customers. For example, customer feedback gathered from a technical support session could inform marketing staff about products and services that might be of interest to the customer. The purpose of collaboration is to improve the quality of customer service, and, as a result, increase customer satisfaction and loyalty. 5. SRM: Supplier relationship management is a comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services it uses. The goal of supplier relationship management (SRM) is to streamline and make more effective the processes between an enterprise and its suppliers just as customer relationship management (CRM) is intended to streamline and make more effective the processes between an enterprise and its customers. SRM includes both business practices and software and is part of the information flow component of supply chain management (SCM). SRM practices create a common frame of reference to enable effective communication between an enterprise and suppliers who may use quite different business practices and terminology. As a result, SRM increases the efficiency of processes associated with acquiring goods and services, managing inventory, and processing materials. 6. mCRM: 7. Operational CRM: According to Crosby and Johnson (2001), operational CRM focuses on improving the efficiency of customer interactions. They mention that operational CRM aims at combining sales, support and marketing databases into a single repository that tracts and manages interactions with customers. It concerned with the customer facing functions and the capturing of data generating as a result of the interactions with the customer. The contact points from where transactional data is usually generated include: a. Call centre interactions with customers b. Sales people interactions c. Automated interactions such as websites d. Interactions with staff such as accounts personnel

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8. Analytical CRM: It is defined as the analysis of customer data for strategic or tactical purposes to enhance both customer and firm value. It aids decision making using various tools ranging from simple spreadsheet analyses to sophisticated data mining. The analysis should enable insights into customer’s behavior.

CRM and Business Intelligence Business intelligence (BI) refers to computer-based techniques used in spotting, diggingout, and analyzing business data, such as sales revenue by products and/or departments, or by associated costs and incomes. BI technologies provide historical, current, and predictive views of business operations. Common functions of business intelligence technologies are reporting, online analytical processing, analytics, data mining, business performance management, benchmarking, text mining, and predictive analytics. Business intelligence aims to support better business decision-making. Thus a BI system can be called a decision support system (DSS). Though the term business intelligence is sometimes used as a synonym for competitive intelligence, because they both support decision making, BI uses technologies, processes, and applications to analyze mostly internal, structured data and business processes while competitive intelligence gathers, analyzes and disseminates information with a topical focus on company competitors. Business intelligence understood broadly can include the subset of competitive intelligence. CRM means many different things to different people. It is possible to develop a greater understanding of it by looking at its origins and the principles that drove its development. In the marketing literature the term Customer Relationship Management is defined in different manner by different market researchers and academicians According to Shani and Chalasani(1992), defines Customer Relationship Management 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 long period of time” Another Narrow perspective of Vavra(1992), CRM is customer retention in which a variety of after marketing tactics is used for customer bonding or staying in touch after the sale is made. According to Gronroos, CRM is marketing strategy to establish, maintain and enhance relationship with customers and other partners, at a profit so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfillment of promises. We define CRM as Customer Relationship Management as a comprehensive marketing strategy to improve marketing productivity which can be achieved by increasing marketing efficiency and enhancing marketing effectiveness through a

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process of acquiring, retaining and partnering with selective customers to create superior mutual value for the parties involved.

Organizations earlier used data processing technologies to assimilate information and effectively distribute the same to the internal environment. Analytical CRM is a management discipline that treats intellectual capital as managed assets; it is not about creating a central database but to gain insight and understanding of customer requirements in order to completely satisfy the needs of customers. Foundation of customer knowledge rests on variety of data sources, data could be numerical, textual, organized in tables, discrete etc. Key to leverage this data is to organize it so that it becomes knowledge on the basis of which informed business decisions could be taken in management institute. The key to successful customer relationship management 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 and is called as customer knowledge catalogue. Analytical CRM helps in development of customer knowledge catalogue which is utilized by the counselling people working in the management institute for the purpose of career guidance. This career guidance is given to the prospect, the person coming for the inquiry and which in then helps in converting them to the advocates or loyal customers. Analytical CRM is designed to analyze deeply the customer’s information and data and unwrap or disclose the essential convention and intension of behaviour of customers on which capitalization can be done by the organization. Primary goal of analytical CRM is to develop, support and enhance the work and decision making capability of an organization by determining strong patterns and predictions in customer data and information which are gathered from different operational CRM systems.

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Relevant analytics capabilities are often interwoven into applications for sales, marketing, and service. These features can be complemented and augmented with links to separate, purpose-built applications for analytics and business intelligence. Sales analytics let companies monitor and understand client actions and preferences, through sales forecasting and data quality. Marketing applications generally come with predictive analytics to improve segmentation and targeting, and features for measuring the effectiveness of online, offline, and search marketing campaign. Web analytics have evolved significantly from their starting point of merely tracking mouse clicks on Web sites. By evaluating “buy signals,” marketers can see which prospects are most likely to transact and also identify those who are bogged down in a sales process and need assistance. Marketing and finance personnel also use analytics to assess the value of multi-faceted programs as a whole. These types of analytics are increasing in popularity as companies demand greater visibility into the performance of call centers and other service and support channels, in order to correct problems before they affect satisfaction levels. Support-focused applications typically include dashboards similar to those for sales, plus capabilities to measure and analyze response times, service quality, agent performance, and the frequency of various issues Difference Between CRM and BI S.No CRM Business Intelligence 1 IT consist of the processes a company uses It refers to the skill, technologies, to track and organizes its contact with its applications and practices used to current and prospective customers help a business acquire a better understanding of its commercial context 2 Display customers most recent inbound Display the name and address of contact on my PDA along with their current business customer corporate address 3 Once a month for the next six month, send Display customer who visit one of a direct mail solicitation to customers most the video store in our chain on likely to rent next month’s new features weekly basis who are not weekly visitors to the store 4 Contact all high value customers who have Display a list of customers who lodged a complaint. Generate retention have lodged a complaint within the recommendations for each customer past 30 days 5 Identify the top five purchased office Analyze the top five most popular supplies and trial run an automated web office supplies and compare request for quote system for limited approved vendor prices to prices of quantities to test price improvements other potential suppliers 6 Send profitable registered customers online List the email addresses for discounts if they fill in a form explaining registered customers who why they abandoned their shopping carts. abandoned their shopping carts during their last web vist.

Campaign Management 17

Campaign management software applications allow marketing users to segment groups of customers (and prospective customers) into smaller groups and then specify the interaction that should take place with those individuals. For example, consider a marketing manager for a cellular phone company that is focusing on customer retention. There might be a large number of reasons that a customer chooses to leave their cellular provider, and the marketing manager is responsible for identifying ways to reduce this problem. One group of customers might be leaving because they are experiencing technical problems (e.g., frequent dropped calls) while another group might be leaving because the plan they are signed up for does not match their current calling patterns (e.g., a local calling plan with a large number of national calls). A user of the campaign management software would define these segments by selecting customers in the database that have these characteristics. For the customers with technical problems, the marketer could create a customer segment that selects those customers who have had more than five dropped calls within the same month. The information that drives these selections is contained in a customer data warehouse, a database that is used to collect information about customer characteristics and activities. In the case of dropped calls, the customer service call-center would enter information in the database when a customer called to complain (even better would be an automated system that identified dropped calls and automatically added them to the database without a customer complaining). Once this segment is defined, it needs to be associated with offers that will be communicated to the customers in order to improve retention. In the case of customers with technical problems, the offer might be a rebate of one month's charges and a promise to improve service quality. This offer could be communicated by a call from customer service or via a piece of direct mail (email might be a third option, if the customer's email address is available). The campaign management application would take the segment and split it into two groups, half receiving a phone call and the other half receiving a piece of direct mail (which half a customer fall into would be a random selection). In addition, the marketing person might want to try out a slight alternative, offering a rebate of one-half of the most recent bill. The idea being that the less expensive offer might be more cost effective. Data will be collected and a statistical analysis done at a later date in order to evaluate the difference between the two offers. This test offer would then further segment each of the two existing segments (phone call, direct mail) into to additional groups, with most (say 90%) receiving the full-month rebate while a smaller group (10%) receiving a half-month rebate. Once the definition of the segmentation is complete and the marketing manager is satisfied with the campaign, it still needs to be executed. This would be handled by a scheduler that executes the campaign at regular intervals (e.g., monthly). Upon execution of the campaign, the segments associated with the phone call would be passed to the callcenter software system, which would queue up the customers who are supposed to receive the offer along with the specifics of the script that the operator is supposed to use

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(full or half month rebate). The direct mail segments would likely be handled differently, possibly by using an external vendor (a "mail shop") that would take a list of customers and produce the actual envelopes that would be mailed. In this case, the campaign management system would generate a file listing each of the customers, including their address and offer type. This process of creating segments, associating them with offers, and executing campaigns would be repeated for each possible segment that a marketing manager might think of (some companies define thousands of possible segments for their customers). Collisions between segments are handled by the campaign management software, either by excluding customers from segments (based on a set of rules) or by allowing the overlap. Over time the effectiveness of the segments are evaluated, with refinements incorporated continuously (this kind of marketing is sometimes referred to as "continuous customer management"). Campaign Management can be based upon: 1. Demographic profile i.e. the income of parents, social status, geographic location etc. 2. Psychographic profile i.e. attitude towards usage of products 3. Which products would be needed by particular segment 4. Which products would be deemed suitable by a segment 5. Choice of variants and sizes 6. Which channel of communication is preferred by a particular segment 7. Preferred action options The following steps to be followed for effective campaign management: 1. Take into account the needs of a segment before deciding on the offers to be made 2. Use segment characteristics to decide on communication channel, product variants, etc that are offered. 3. Analyze the response to previous campaigns before finalizing the offers 4. Create metrics to measure the success of the campaign Types of Campaign Single stage campaign Multi stage campaign Single channel campaign Multi channel campaign Trigger based campaign

A one-off communication to a customer Follow ups on earlier communication with a defined strategy for non responders May be single/multi stage but using only one channel for communication A single / multi stage campaign through multiple channels Based on a trigger generated as a result of the customer’s profile, purchase behaviour etc

Measurement metrics for campaigns: The success of campaign needs to be judged and metrics should be used to provide correct indicators. These should include:

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   

Volume of communication sent and percentage of response received Volume of responses converted into sales Value of the sales Cost of the campaign v/s value of the sales.

CRM Marketing Initiatives 1. Cross-Selling: Cross-selling is defined by the Oxford English Dictionary as "the action or practice of selling among or between established clients, markets, traders, etc." or "that of selling an additional product or service to an existing customer". In practice, businesses define cross-selling in many different ways. Elements that might influence the definition might include:  the size of the business  the industry sector it operates within  the financial motivations of those required to define the term. The objectives of cross-selling can be either to increase the income derived from the client or clients or to protect the relationship with the client or clients. The approach to the process of cross-selling can be varied. Unlike the acquiring of new business, cross-selling involves an element of risk that existing relationships with the client could be disrupted. For this reason, it is important to ensure that the additional product or service, being sold to the client or clients, enhances the value the client or clients get from the organization. 2. Up-Selling: Upselling (sometimes 'up-selling') is a sales technique whereby a saleperson induces the customer to purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale. Upselling usually involves marketing more profitable services or products, but upselling can also be simply exposing the customer to other options he or she may not have considered previously. Upselling implies selling something that is more profitable or otherwise preferable for the seller instead of, or in addition to, the original sale. A different technique is cross-selling in which a seller tries to sell something else. Some examples of upsales include: o suggesting a premium brand of alcohol when a brand is not specified by a customer, such as if a customer simply requests a "rum and Coke"). o selling an extended service contract for an appliance o suggesting a customer purchase more RAM or a larger hard drive when servicing his or her computer o selling luxury finishing on a vehicle o suggesting a brand of watch that the customer hasn't previously heard of as an alternative to the one being considered. o suggesting a customer purchase a more extensive car wash package. In practice, large businesses usually combine up-selling and cross-selling techniques to enhance the value that the client or clients get from the organization in addition to maximizing the profit that the business gets from the client. In 20

doing so, the organization must ensure that the relationship with the client is not disrupted. 3. Customer Retention: Customer Retention is the activity that a selling organisation undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organisation has with a customer and continues throughout the entire lifetime of a relationship. A company’s ability to attract and retain new customers, is not only related to its product or services, but strongly related to the way it services its existing customers and the reputation it creates within and across the marketplace. Customer retention is more than giving the customer what they expect, it’s about exceeding their expectations so that they become loyal advocates for your brand. Creating customer loyalty puts ‘customer value rather than maximizing profits and shareholder value at the center of business strategy’. The key differentiator in a competitive environment is more often than not the delivery of a consistently high standard of customer service. Customer retention has a direct impact on profitability. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers, while having engaged employees and engaged customers returns a revenue gain of 3.4 times the norm. 4. Behaviour Prediction: It helps marketing departments determine what customers are likely to do in the future. Using sophisticated modeling and data mining techniques behaviour prediction uses historical customer data to foresee future behaviour. This analysis includes several variations:  Propensity to buy analysis: Understanding which products a particular customer is likely to purchase.  Next sequential purchase: Predicting what product or service a customer is likely to buy next.  Product affinity analysis: Understanding which products will be purchased with other products.  Price elasticity modeling and dynamic pricing: Determining the optimal price for a given product often for a given customer or customer segment. 5. Personalization: Personalized marketing (also called personalization, and sometimes called one-to-one marketing) is an extreme form of product differentiation. Whereas product differentiation tries to differentiate a product from competing ones, personalization tries to make a unique product offering for each customer. Personalized marketing had been most practical in interactive media such as the internet. A web site can track a customer's interests and make suggestions for the future. Many sites help customers make choices by organizing information and prioritizing it based on the individual's liking. In some cases, the product itself can be customized using a configuration system. More recently, personalized marketing has become practical with bricks and mortar retailers. The market size, an order of magnitude greater than that of the Internet, demanded a different technological approach now available and in use.

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Many retailers attract customers to the physical store by offering discounted items which are automatically selected to appeal to the individual recipient. The interactivity occurs through the offer redemptions recorded by the point of sale systems, which can then update each model of the individual shopper. Personalization can be more accurate when based solely upon individual purchasing records because of the simplified and repetitive nature of some bricks and mortar retail purchasing, for example grocery superstores. 6. Channel Optimization: The goal of marketing automation is to offer the right message to the right customer and at the right time. With the advent of the Internet many firms are appending through the right channel as customer’s interaction preference evolve. For instance a new customer whose use of online banking services has steadily increased might prefer to be emailed a new offer along with regular statement. Understanding the channels through which specific customers prefer to interact with your company is only a slice of the pie. Company must also decide how best to communicate with customers. Because a valuable customer prefer his work to be done online and in an effective manner. Channel management means optimization of inbound and outbound means of customer interaction and knowing how to choose the best approach for each. 7. Contact Management: Business contacts in customer organizations are people whom the sales personnel contact initially for say sale. They may be at various levels in the hierarchy customer organization. Some may be simply contact persons while others may be decision maker, whose opinion go a long way in finalizing the deal. Previously the sales representatives would maintain business cards of these key contacts in transparent vinyl folders. These formed the life blood as far as providing information with the key contact was concerned. However, many important characteristics about contacts are lost especially if they are present at a tacit level with the sales representative. If a different sales representative is assigned to this territory, he will not have the advantage of such information and will have to start fresh. Contact management provide critical information about each customer contact is stored in the system and is available easily. Sales representatives can access such information through their mobile PDAs or laptops anywhere, while on the move and accordingly tone their sales pitch.

Marketing Automation The name given to software platforms designed for marketing departments and organizations to simplify processes by automating repetitive tasks is Marketing Automation. Marketing departments, consultants and part-time marketing employees benefit by specifying criteria and outcomes for tasks and processes which are then interpreted, stored and executed by software, which increases efficiency and reduces human error. Today’s business world is incredibly competitive and many companies look for ways to make their marketing campaigns more effective. Often, advertising dollars are limited and companies seek to avoid investing in marketing strategies that may not produce satisfactory results. As such, many companies find it advantageous to develop methods for managing and tracking marketing campaigns in order to provide greater

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understanding of customer profiles and profitability. Marketing automation can be effective for keeping track of the campaign strategies that work versus those that fail to produce good results. At the same time, marketing automation can make it easier to use campaign results in developing improved campaigns for the future. To many, marketing automation involves the use of specially designed software. Marketing automation software allows businesses to automate important marketing processes. This type of software can help businesses in accomplishing varied tasks such as defining, scheduling, and tracking campaign goals and creating and implementing marketing campaigns. Marketing automation software can also help businesses in market segmentation and identifying target markets, as well as the collection of pertinent market information and response. Collected response information is fed back into the system. Some types of marketing automation software make it possible to manage campaigns that encompass many different marketing methods. For example, such software may be used with print, Internet, radio, television, and e-mail marketing campaigns. However, the capabilities of marketing automation software may vary widely depending on the particular software. For some, marketing automation doesn’t mean a particular program or group of applications at all. Instead, it means varied tools used for analysis and profiling. Such tools can include everything from web measurement to those intended for personalizing campaign strategies. These tools are used to improve communications with customers and obtain valuable insight into a company’s marketing target. For other companies, marketing automation is not simply software. Instead, it is an entire system focused on the management of high-volume marketing campaigns. Often, such high-volume campaigns focus on offline marketing strategies, such as those that are direct mail or telephone-based. Regardless of the type of marketing automation a company chooses to implement, there is always a common denominator. That common denominator is the use of technology to ensure better communication with customers and more targeted and effective marketing campaigns. Frequently, the type of marketing automation path chosen is directly linked to company size and sales volume. There are three categories of software: 1. Marketing Intelligence uses tracking codes in social media, email and webpages to track the behavior of anyone interested in a product or service to gain a measure of intent. It can record which social media group or thread they followed, which link was clicked on in an email or which search term was used to access a website. Multiple link analysis can then track buyer behavior - following links and multiple threads related to product A but not B will show an interest only in A. This allows more accurately targeted response and the development of a nurturing program specifically targeted towards their interest and vertical market. Due to its interactive nature this has been described as Marketing Automation 2.0. 2. Marketing Automation has a focus on lead generation with targeted marketing programs to drive awareness and interest in a company's products and/or services

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and nurture leads from first interest through to sale. Commonly used in businessto-business(B2B), business-to-government(B2G), or longer sales cycle businessto-consumer(B2C) sales cycles, Marketing Automation involves multiple areas of marketing and is really the marriage of email marketing technology coupled with a structured sales process as delineated by a CRM program. 3. Marketing Workflow Automation encompasses automation of internal marketing processes. These includes budgeting and planning, workflow and approvals, the marketing calendar, internal collaboration, digital asset creation and management and essentially everything that supports the operational efficiency of the internal marketing function. Typically these systems require a CRM or COM administrator to set up a complex series of rules to trigger action items for internal sales and marketing professionals to manually process (designing files, sending letters, sending email campaigns). This type of system increases marketers ability to deliver relevant content to relevant individuals at relevant times. Limitations may apply, based on the human resource capacity of an organization and their level of commitment to the tasks as they are assigned.

Call Centre and Customer Care A call centre is a group of agents and/or automated voice response units that support customer contact functions over the telephone. They are assisted by computers. A call centre must anticipate and accommodate customers needs by delivering the right information, at the right time, in the right way, with right quality. Objectives of call centre           

Offer a high quality of customer service Have contractual agreements met Quicker and more reliable response to service requests Consistent service Increase communication with the organization Improve customer satisfaction Enhance knowledge circulation Increase employee productivity Decrease costs Differentiate against competition Increase sales revenue

Call Centre Features and their functionalities  Contact Management: Improve the quality of customer service by providing the information instantly on the agent’s screen. Deliver prompt, refined and knowledgeable service that does not require callers to repeat their questions as they are routed through the organization. Maintain a database of all customer contact persons with details as part of knowledge base.  Opportunity Management  Campaign management

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Target efforts at a particular segment of contacts or prospects Get new business from existing customers Measure returns from campaign and media Increase revenues resulting from cross selling and up selling opportunities  Improve your reach o Activity Management: Streamline activities to track from start to completion. Reduce the reliance on slow, cumbersome paperwork. Increase productivity either by reducing head counts or by increasing the level of services without adding incremental staff. Shorten the learning curve, reduce the amount of agent training time required each time a new product or service is offered, or when a new computer system, peripheral or application comes online. o Customer management: Provide single contact point for any customer query. Identify and track loyal customers based on pre defined parameters and focus on profitable customers, attract new customers, nurture and retain them for high profitability. o Workflow management: Efficient enforcing of key business practices to increase communication across the organization: automation of business processes based on events. Facilitate complex business functions by providing the necessary automated business workflow and message based routing and querying functions. In an economy of converging technologies, morphing markets and web paced communications, customers get ready access to an unprecedented amount of information from anywhere in the globe and at any time of day or night. In response, a host of new products and services emerges to serve these customers. In a competitive environment, the one idea that is likely to succeed will be the customer centric model, where the organization builds long term strategic relationships with its customers.    

It is CRM that encapsulates this view better than other concepts and technologies like BPR, TQM, SCM and ERP. Now CRM is embedded into every Call Center (CC). A CC is an arrangement where the division of an organization or its intermediary acts as a link with their customers. The typical CC is an area where specially trained employees called as Customer Services Representatives (CSR) or Customer Care Executives (CCE) are available and these people handle queries on products and services. The CC is a single function unit limited to customer care and support and sometimes sales. The CC helps in Customer Care through various touchpoints such as:  Phones  Email  Touchscreen kiosk  Fax  Internet Char The CCE of the contact center is an active salesman, not a passive middleman routing queries. He uses a bank of telephones that is supplemented by computer terminals and high-end CRM software. The most basic customer interactions like enquiries are automated and the CCE gets more time for customer service with personalized care. Typical CC software would link telecom hardware to IT databases at the backend and 25

communicate automated information to the callers in the form of interactive voice response (IVR), and screen pop-ups layers through the CSR. New CC systems incorporate internet technologies and be web-enabled, allowing more interactivity for their callers, while keeping the basic model for customer interaction unchanged. Customer service applications at the CC includes:  help desks,  technical support,  product information,  service calls,  scheduling,  catalogue services,  and reservations. Components of Call Center for customer care The CC system has three entities Caller: The caller communicates with the PBX linked to the IVR, where he selects an option that relates to his need. The trigger in the CTI N(customer telephone interaction) for the screen popup’s could be either caller’s telephone number or his account number and this may be supported by a unique telephone number.  The CCE: The focus of the CCE should be threefold:  Get new customers  Retain customers  Grow profitable customers o The ACD(Automated Call Distributor) , is a computerized system that responds to the caller with voice menu and connects the call to next available CSR. 

CC delivers gains for any industry that needs a customer interface and where the success of transactions is based entirely on information availability. CC can drive focused direct marketing campaigns using captive data supported by technology such as predictive dialers. CC cuts effort, time and costs for their customers, for more value to them. Quick and consistent services delivered whenever desired by the customers can help to retain existing customers. Promotion campaign stands a better chance of success. CC can increase customer satisfaction and allow products and services providers to operate on an 24x7x365 global scale. CC builds relationships with prospective and current customers by managing information, and delivers products and services at speeds that facilitate customer retention and creation.

Automating the contact center Contact centers have evolved quickly from a group of local workers answering phones during business hours to a dedicated organizations providing on demand global support and sales through several different channels. Companies are realizing increasingly that their customer relationships are only as good as the quality of their support and are

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adopting customer telephony integration that automates various communication processes. ACD (automated call distributor) is a computerized phone system that responds to the caller with a voice menu and connects the call to next available CSR. 1. Call Routing: A company’s customer support “help desk” might actually made up of several or many geographically dispersed contact centers. These contact centers might be segregated based on: a. The location of the company’s regional offices. b. Staff expertise or product specialization. c. Proximity to key research and development activities d. The location of the firm outsourcing the company’s contact center e. Various escalation levels for trouble tickets. Because performance remains the central metric of contact center success, minimizing the time a customer waits on hold for CSR stays a top priority. To further minimize customer wait times “load balancing” is a critical objective. Network routers monitor operator availability while keeping track of incoming calls in the queue, using switch technology to allocate calls appropriately. The automatic call distribution not only reduces the time a customer stays on hold by efficiently routing calls to available agents but it can also apply intelligence about the customer to its decision about where to route a call. For instance by using caller identification, a call center system can route a call from a multicultural city such as Los Angeles to a bilingual CSR. Automated call distribution also called as precision call distribution, facilitates calls to be routed to agents who have access to specific information or with particular areas of expertise. 2. Contact Center Sales Support: Your customer has just purchase a diamond solitaire necklace and would like to know if there are matching earrings. Such an interaction could be just another customer inquiry or an opportunity to generate additional revenue. With the right information often displayed via a little window called a screen popup on the customer service representative, a representative can gauge an incoming call to determine whether the customer on the other hand of the phone line is good candidate for another product or service. The call center as point of sale is a relatively new practice that requires a combination of robust customer data and CSR finesse, because the CSR needs to transcend his traditional role of answering questions, landing smack in the middle of revenue generation. To optimize the customer’s experience with call center sales support, companies must have the right information about the customer. 3. Web based self service: It provides companies with a means to conduct interactive, personalized and relevant communication with customers across both electronic and traditional channels. It empowers customers to decide when and how to communicate with the company through which channel and at what frequency. It adheres to permission based practices, respecting individuals preferences regarding how and whether they wish to communicate with you and it

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4.

5.

6.

7.

focuses on understanding how the economics of customer relationships affect the business. Customer Satisfaction Measurement: The customer satisfaction has significant implication for the economic performance of firms. Customer satisfaction has an impact on customer complaints while having a positive impact on customer loyalty. Increase customer loyalty may have the following benefits: a. Increase usage levels b. Secure future revenues c. Minimize the likelihood of customer defections The customer satisfaction may be measured the usage of key performance indicators:  Average value of call (for turnover generating call centers) to be calculated as the total turnover divided by number of calls.  Availability  Schedule discipline  Percentage of abandonment: the number of people who hang up, callers who get the busy signal  Average handling time: the sum of the average conversation time and the average completion time  Costs per call Call Scripting: As customer contact centers become more automated, the infrastructure improves. Customer databases become richer and customer behavior and preferences can actually be predicted by comparing them to the behavior of similar customers over time. Because of this increase customer intelligence, the capability to provide CSRs with the situational scripts is emerging as a must have for many contacts centers. Such scripts eliminate agent guesswork by providing the CSR with a logical series of talking points and guiding her through a dialog with the customer based on such factors as a. The reason for the contact b. The customer’s value c. Cross selling opportunities and propensity to buy data d. Current product promotions or discounts e. Past due bills or accounts payable issues Cyberagents: cyberagents attempt to pull together the best of both personalization and advanced technology. On the one hand, the cyberagent is a personality complete with voice and facial expressions often communicating with the web visitor by her first name. The vision for the cyberagent is to go from providing information to actually making decisions based on a combination of the customer’s request, heterogeneous and detailed information about the customer and complex rules based logic to guide the cyberagent in making recommendations. Cyberagents are emerging as a viable means of providing basic customer support. Workforce Management: Workforce management tools specialize in staff planning and optimization, and several products are specific to contact center staffing. Optimizing staff around high call volumes, different communication channels, and customer types is the surest means of guaranteeing that the right 28

customers receive the appropriate levels of support. Such products can combine operational contact center desks, such as call routing with planning function including: a. Ability to forecast contact volumes to predict busy periods b. Recommendations for the optimal number of CSRs for certain peak periods c. Performance tracking by customer value, customer satisfaction, priority level or other metrics d. Employee scheduling based on skills, tenure or preferred work hours e. Global monitoring of multiple contact centers, with the ability to combine findings into single reports for staff or fine-tuning

Checklist for customer support success 1. Choose technologies carefully 2. Provide CSRs with everything they need to known about customers 3. Establish processes for call center staff. 4. Agree on success metrics 5. Understand the issue of service recovery 6. Ensure that your contact center reps are properly trained 7. Staff the contact center at appropriate levels 8. Share key Learnings 9. Improve CSR compensation 10. Your company has not already determined its corporate personality Unit-2

Sales Force Automation Sales force automation is a technique of using software to automate the business tasks of sales, including order processing, contact management, information sharing, inventory monitoring and control, order tracking, customer management, sales forecast analysis and employee performance evaluation. Sales force automation (SFA) software is a type of program that automates business tasks such as inventory control, sales processing, and tracking of customer interactions, as well as analyzing sales forecasts and performance. Businesses may have a custom version developed specifically for their needs, or choose from among the increasing number of sales automation software products, such as Interact Commerce's ACT! and GoldMine Software's GoldMine. Sales automation software is sometimes called sales automation software, and sometimes called customer relations management ( CRM ) software. SFA packages typically include a Web-ready database, an e-mail package, and customizable template s. A three-tiered architecture is typically used to separate the database, server, and application to reduce programming demands on clients. A modulebased design is generally used, to allow users to customize the package to suit their needs.

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In August 2000, Oracle released a free CRM software package, OracleSalesOnline.com which makes information - such as contacts, schedules, and performance tracking available online through the included database program. The package is designed for medium-to-large enterprises with mobile work forces. All data and storage are based at an Oracle facility, similar to the application service provider ( ASP ) model, which means that data can be accessed from any Internet connection and that the client doesn't need special hardware or software. The Oracle package also includes online staff training.

Sales force automation, or SFA, is a term that refers at its most basic to automating critical sales functions like lead and account management. Sales force automation uses software to automate sales tasks like order processing, lead generation, information sharing, contact management, customer management, and employee evaluation. It also keeps track of customer preferences, buying habits, demographics, and performance management. Sales force automation tools improve field sales productivity and open whole new realms of possibility for companies. With an on-demand

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architecture that allows effective sales force management and CRM, managing sales information is easy on even the largest scales. Essentially, customers and sales employees can manage and share any type of information. The objectives of undertaking sales force automation are as follows: 1. Comprehensive picture of the sales situation: The collation of the sales data through the automation process should offer a comprehensive picture of the total sales situation at any given point of time. They should include the various aspects like current prospects, salesperson-wise sales situation, future projections from customers etc. 2. Enabling sales with the power of automation: Sales is a process that can be aided through automation. The sales force could be helped with mobile devices that enable it to access company information that can help in a sales situation. These include: a. Current inventory position b. Order status c. Credit position etc 3. Sales Analysis: Real time analysis of the sales situation is a necessary input for sales manager. The sales force automation should enable a variety of analysis to be available on anytime anywhere basis. This means that remote access should be provided to salespeople on the field. The methods used include: PDAs with internet access which enable accessing the servers, laptops that are connected to servers offering the desired analysis. By enabling real time access, they are upto date. 4. Comprehensive Access to All desired materials: Salespeople seek a variety of materials to enable them in the sales process. These include: a. Product brochures b. Comparisons sheets c. Sales incentive schemes d. Quotation formats e. Order formats f. Sales report formats All these necessary documents should be made available on a system that is readily accessible by the sales person even from remote locations. There are a number of benefits and features that come with sales force automation technology, and these features comprise the backbone of the SFA system. They include: 1. Lead management Lead management allows companies to keep better track of leads by ensuring they don't get cold. This can reduce or eliminate the need for manual routing and lead assignment duplication, clearly defines opportunity assignments, and is able to automatically assign leads to the correct individual based on territory, product expertise or user-defined rules. Thus SFA allows for automatic load leveling across sales territories, and better relationships between team members.

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For example, with automatic lead management, you can set security controls that ensure teams or partners can access only their own leads, increase lead conversion rates and improve sales response times. 2. Opportunity management Opportunity management allows sales teams to work better as units by standardizing sales methods and systems, identifying bottlenecks, and tracking deal closures. It also allows employees to focus their resources on strengthening key partnerships and dominating key competitors instead of competing with each other. More organized sales teams allow managers to delegate tasks and set up automatic reminder emails for themselves and their team. Most importantly, the opportunity management feature allows companies to centrally track custom information like partner and customer communications and milestones while simultaneously monitoring myriad sales processes like sales channels, service effectiveness or product lines. 3. Account management An account management system ensures that your company is able to attain full knowledge of your customer accounts. Accurate knowledge of customer account equals better collaboration amongst your sales teams and retains lasting customer relationships. Additionally, account management allows a company to defines and evaluate all those involved with the account, from the project manager to the executive sponsor. With account management, you can set up online access to all customer account information, like organization charts and current partners-across the entire company. No one is left in the dark and everyone knows the account status and history. 4. Territory Management On-demand, advanced territory management capabilities allow you to adjust to rapid changes within your company. An easy point-and-click interface ensures your company can automatically route accounts and opportunities to the correct territories. A solid territory management system also decreases lag time in lead assignments by ensuring a lead never gets cold; lead assignments are easily queued and automatically sent to the correct territory. In essence, territory management allows companies to easily monitor, set up, gather, transfer, assign, re-assign, and change accounts across territories.

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5. Contract Management Contract management is another integral feature in sales force automation. Essentially, it allows companies to manage a contract's lifespan by shortening approval cycles for contracts, renewing contracts sooner, and reducing administrative costs. This SFA feature improves tracking and management of contract information, such as value, conditions, terms, evaluations, and more. 6. Knowledge Management As field salespeople know all the information related to products and services. Customer data is necessary for selling; and the more information available the better. Organization have surplus of information. Accessing internal documents can provide the sales force with the information it needs to understand a variety of components in the sales life cycle. Such information might include:  Corporate policy handbooks  Sales presentation slides  Company phone list  Proposal templates  Contact boilterplate  Expense report forms etc Traditionally, most companies have had to build, buy and sustain an IT software system all on their own; however, this leads to extremely high maintenance fees and myriad other costs. Today, the advent of automated sales force technology allows businesses to subscribe to already built, on-demand, customizable services that provide everything a traditional IT software does and more. The architecture of sales force automation allows for a decrease in the total cost of ownership, reduction of risk factors, a decrease in wasted time, and a new focus on business and management rather than technology.

Sales Force Automation and Mobile CRM Keep your sales team selling! Mobile puts CRM and other enterprise system data in the palm of your hand, giving sales professionals the information they need to visit customers with confidence. SMART Field Sales extends customer, product, warranty, order and billing information so you can more effectively interface with your customers and deliver superior service at the point of sale. Throughout the entire sales cycle - from providing a quote to issuing an invoice - SMART Field Sales offers real-time visibility and management of sales accounts, leads, contacts, tasks and opportunities regardless of connectivity. Mobile CRM is on the rise in the world of CRM and demand is growing as companies and employees are demanding access to crucial information in real time. Allowing for a more versatile, mobile workforce and faster access to information, mobile CRM is here to

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stay. Here are the top ten reasons your company should consider implementing a mobile CRM system.

Features 

Provide immediate, knowledgeable customer service



Access to enterprise system(s) including order status, service requests and customer data



Coordinate internal resources to address customer needs in a timely manner



Improve fulfillment response with full views of inventory and on-thespot ordering



Accelerate the sales process – from quoting to sales and fulfillment to final billing

1.

Mobility Keeps Sales Aligned From Anywhere Superior Customer Service: Customers expect an instant, accurate response – arm your sales reps with detailed customer data including order status, history, pricing, inventory and billing status. Sales Cycle Visibility Get a real-time, accurate view of your sales organization at all times from pipeline to year-end review. More data means better management across the supply chain. Accelerate Sales Cycles From checking inventory availability to placing on-the-spot orders to capturing a signature to close the deal, SMART speeds the sales cycle from quote to billing. Faster access to data Sales professionals can access data in real-time, so it is always the most current, up-to-date information available. If you need to know about a client or lead, you can find what you need to know immediately via phone, laptop, PDA, or other mobile device. Central data center A central data center allows you to access all the information all the time. No one person has longer access to a file or case; you can look at it simultaneously without slowing anything down. And if a client id shifted to you suddenly, you have access to all their information in a matter of minutes. Thus, mobile CRM is an extremely effective, efficient ancillary to your normal CRM system. Leads stay hot and glide down the pipeline Leads don''t get cold because there will always be someone to pick up the slack. Mobile CRM also makes it easier to ensure the lead gets nudged down the pipeline gently but effectively and ends up in the correct place.

Benefits

2.

3.

4.

5.

6.

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Access to critical information anytime, anywhere Mobile CRM allows you to access information in the central database from anywhere in the world at any time, provided you have access to a mobile device that works. 8. Easy to use Mobile CRM is amazingly easy to use and takes much of the stress off of professional sales people. It allows them to stay in touch and get new updates. 9. Ideal for travel Mobile CRM is especially conducive to sales professionals who travel a large part of the time. Because you can use any mobile device, traveling isn''t difficult, and it''s far less stressful. If you suddenly remember something you have to find or look up, forget a client''s information, or any other number of scenarios, mobile CRM can be the way you solve the problem. 10. Usable online and offline Mobile CRM can be used online and offline. If the internet doesn''t work or the connection has failed, you can get on your mobile device; if you lose your phone but have your laptop or PDA, you''re covered. Thus it provides an almost fail safe way to get the information you need, when you want it. 11. Competitive advantage Mobile CRM offers a competitive advantage because it offers a way to reach more customers than just using a traditional CRM system. It is quickly growing to be one of the de facto methods of CRM outside of the workplace. 12. Reasonably priced Once priced ridiculously high, mobile CRM systems are now more reasonably priced, and this has added to their growth in popularity. 13. Allows for a highly mobile work force Professionals are no longer confined to the office; they can leave for an appointment or business trip and still remain totally connected to the workplace and their clients. 7.

Most critical Factors for the successful implementation of Mobile CRM 1. Off-line functionality is key. Sales professionals will use a mobile application only if they can reliably depend on it -- every time. To ensure that the mobile application and CRM data is always available when they need it, mobile applications must support off-line functionality. Contrary to what many in the industry would have you believe, wireless coverage isn't ubiquitous, nor is "broadband wireless" a possibility with current technology. Mobile CRM applications must be designed with the ability to intelligently use a wireless connection when it's available, but to not be dependent on it. 2. Open standards aid integration. Field professionals don't just need access to customer information in the field; they also need information on

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promotions, products, competitors, service requests or order status. So selecting a platform based on open standards that can integrate with a variety of back-end systems -- ERP, intranet, legacy, database and e-mail -- is imperative. In addition, support for open standards also ensures that your application can support a wide variety of platforms and is flexible enough to keep up with the rapidly changing device landscape. 3. Security is crucial. Mobile CRM applications typically contain your field service and sales organization's lifeblood: customer contact information. Handheld applications should be able to provide enterprise-caliber security through authentication, encryption and central, policy-based control 4. Ease-of-use should be top of mind: Mobile application performance and ease of use are vital for field professional effectiveness and adoption. Unlike desktop or laptop applications, field professionals use handheld applications in small time increments of one to 10 minutes. This means that users in the field will quickly stop using a system that's slow or difficult to use. To be effective, mobile CRM systems must be instant-on, easy to navigate and require little or no training. Just as important is a user interface that is configurable to each organization's unique workflow and sales process. The right interface can make all the difference to your end users. 5. Timely information is critical. Features such as server-pushed alerts and scheduled synchronization will simulate an always-connected experience by delivering information to the user as soon as possible given the wireless coverage in a particular area. Mobile applications should accelerate communication, decision-making and customer responsiveness by keeping users in touch.

Field Force Automation Mobile CRM is on the rise in the world of CRM and demand is growing as companies and employees are demanding access to crucial information in real time. Allowing for a more versatile, mobile workforce and faster access to information, mobile CRM is here to stay. Here are the top ten reasons your company should consider implementing a mobile CRM system. Field Force Automation refers to the use of technology to capture field sales (or service) information in real time. This involves use of technology, typically handheld PDAs, wireless devices or mobile phones to capture data. The captured data is transferred immediately to back end systems (ERP, CRM or accounting systems) through Wifi, 3G or GPRS connection. This instant capture of information reduces time delays, avoids manual data errors and enhances field force productivity. From an operations perspective, availability of field information in near real time allows to plan delivery schedules, reduce inventory and monitor & control the field sales team. The biggest challenge in Field Force Automation is in developing a simple, but usable, user interface for the hand held device/ mobile and connectivity at the location of information capture. Connectivity can be overcome by having a system which can retain the information captured in the device cache and later synchronize with back end systems.

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Some examples of Field Force Automation systems include Nokia Tej from Nokia, Mobile Field Service from BlackBerry, etc. In simple words Field Force Automation implies part’s customer service in that field service implies the service or repair of customer equipment on the customer’s premises. It began in the 1980s in manufacturing organizations, who regularly dispatched technicians to remote sites to test and repair equipment. The classic process of dispatching a technician involved an unwieldy, paper intensive set of instructions that took days or weeks as various staff members became involved to register, communicate, analyse, diagnose, monitor, close and review the problem.

Benefits 1. Now customer can use wireless technology to report problem from any where and anytime via his cell phone to the field service officers. 2. The CSR can actually enlist the support of product specialist or field service engineers by sending a message to their wireless devices. 3. With the right analysis capabilities, the CSR can rate the severity of a customer problem then determine whether a field service representative should be dispatched based on either her particular skill set or her current distance from customer’s site. In this way the CSR can dispatch the technician most likely to fix the problem the fastest. 4. Field technicians not only receive dispatch order via their wireless devices; they can even make use of these devices during the actual repair. The ability to pop a CD into a CD-ROM or insert a memory card containing installation instructions, repair guidelines or equipment specifications provide the technician with the information he needs while at the customer site and frees him from lugging around bulky how-to manuals

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5. Improve the quality of reliability data by reducing voice communications necessary and establishing a single point of data by central dispatchers. 6. Increase customer satisfaction due to more timely updates of restoration status

Components of Field Force Automation The three major components within the core package of FFA are: • Resource planning that lays the building blocks for effective scheduling: – Stores individual and crew employee calendars, start/end work location, organizational structure, skill set, wages, preferences, and equipment held – Models workforce shift/rotation, holiday, illness, training, and overtime considerations – Analysis of company policies and collective agreements affecting staff deployment – Full support for multi-person crews and individuals required for a specific task • Optimized scheduling differentiates FFA by combining resource intelligence, planning, and modeling with advanced street level routing: – Schedules resources using manual, automatic, and semi-automatic modes with heuristic algorithms – Automatic, optimal selection of materials and workers based on complex resource analysis, including advanced real-time analysis such as proximity and equipment of currently deployed crews – Optimized routing, beyond point-to-point distances, with street level information, such as: - One-ways - Average speed - Traffic signals - Real-time information (if available) such as traffic flow, accidents, closures, etc. • Dispatch management delivers optimized crew deployment with these abilities: – Web-based dispatch board and Gantt chart—dispatcher has full control from calendar management to technician login/logoff – Track employee tasks on dispatch board with map-based dispatching and GPS/AVL updates – View overall operations or detail on work and mobile workers – Alert dispatchers to priority events – Automated work status updates

eCRM (Electronic Customer Relationship Management) eCRM Electronic CRM concerns all forms of managing relationships with customers making use of Information Technology (IT). eCRM is enterprises using IT to integrate internal organization resources and external marketing strategies to understand and fulfill their customers needs. Comparing with traditional CRM, the integrated information for eCRM intraorganizational collaboration can be more efficient to communicate with customers

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The concept of relationship marketing was first coined by Leonard Berry in 1983. He considered it to consist of attracting, maintaining and enhancing customer relationships within organizations. In the years that followed, companies were engaging more and more in a meaningful dialogue with individual customers. In doing so, new organizational forms as well as technologies were used, eventually resulting in what we know as Customer Relationship Management (CRM). The main difference between RM and CRM is that the first does not acknowledge the use of technology, where the latter uses Information Technology (IT) in implementing RM strategies. As the internet is becoming more and more important in business life, many companies consider it as an opportunity to reduce customer-service costs, tighten customer relationships and most important, further personalize marketing messages and enable mass customization.] ECRM is being adopted by companies because it increases customer loyalty and customer retention by improving customer satisfaction, one of the objectives of eCRM. E-loyalty results in long-term profits for online retailers because they incur less costs of recruiting new customers, plus they have an increase in customer retention. Together with the creation of Sales Force Automation (SFA), where electronic methods were used to gather data and analyze customer information, the trend of the upcoming Internet can be seen as the foundation of what we know as eCRM today. As we implement eCRM process, there are three steps life cycle: Data Collection: About customers preference information for actively (answer knowledge) and passively (surfing record) ways via website, email, questionnaire. Data Aggregation: Filter and analysis for firm’s specific needs to fulfill their customers. Customer Interaction: According to customer’s need, company provide the proper feedback them. We can define eCRM as activities to manage customer relationships by using the Internet, web browsers or other electronic touch points. The challenge hereby is to offer communication and information on the right topic, in the right amount, and at the right time that fits the customer’s specific needs.

eCRM strategy components When enterprises integrate their customer information, there are three eCRM strategy components: 1. Operational: Because of sharing information, the processes in business should make customer’s need as first and seamlessly implement. This avoids multiple times to bother customers and redundant process. 2. Analytical: Analysis helps company maintain a long-term relationship with customers. 3. Collaborative: Due to improved communication technology, different departments in company implement (intraorganizational) or work with business partners (interorganizational) more efficiently by sharing information. Basis CRM eCRM

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Customer contacts

System interface

System overhead (client computers)

Customization personalization information

and of

System focus

System maintenance and modification

Contact with customer All of the traditional made through the retail methods are used in store, phone, and fax. addition to Internet, email, wireless, and PDA technologies. Implements the use of ERP Geared more toward front systems, emphasis is on the end, which interacts with back-end. the back-end through use of ERP systems, data warehouses, and data marts. The client must download Does not have these various applications to view requirements because the the web-enabled client uses the browser. applications. They would have to be rewritten for different platform. Views differ based on the Personalized individual audience, and personalized views based on purchase views are not available. history and preferences. Individual personalization Individual has ability to requires program changes. customize view. System (created for internal System (created for external use) designed based on job use) designed based on function and products. Web customer needs. Web applications designed for a application designed for single department or enterprise-wide use. business unit. More time involved in Reduction in time and cost. implementation and Implementation and maintenance is more maintenance can take place expensive because the at one location and on one system exists at different server. locations and on various servers

The scope of eCRM 1. Foundational services: This includes the minimum necessary services such as web site effectiveness and responsiveness as well as order fulfillment. 2. Customer-centered services: These services include order tracking, product configuration and customization as well as security/trust. 3. Value-added services:

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These are extra services such as online auctions and online training and education. 4. Self-services are becoming increasingly important in CRM activities. The rise of the Internet and eCRM has boosted the options for self-service activities. A critical success factor is the integration of such activities into traditional channels. An example was Ford’s plan to sell cars directly to customers via its Web Site, which provoked an outcry among its dealers network.CRM activities are mainly of two different types. Reactive service is where the customer has a problem and contacts the company. Proactive service is where the manager has decided not to wait for the customer to contact the firm, but to be aggressive and contact the customer himself in order to establish a dialogue and solve problems.

The Need to adopt eCRM The need to adopt eCRM emerges from the following:  Optimize the value of inter-active relationships.  Enable business to extend its personalized messaging to the web and email.  Coordinate marketing initiatives across all customer channels.  Leverage customer information for more effective eMarketing and eBusiness.  Focus business on improving customer relationships, and earning a greater share of each customer’s business through consistent measurement, assessment and actionable customer contact strategies.

ERP (Enterprise Resource Planning) Enterprise resource planning (ERP) integrates internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, etc. ERP systems automate this activity with an integrated software application. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. ERP, which is an abbreviation for Enterprise Resource Planning, is principally an integration of business management practices and modern technology. Information Technology (IT) integrates with the core business processes of a corporate house to streamline and accomplish specific business objectives. Consequently, ERP is an amalgamation of three most important components; Business Management Practices, Information Technology and Specific Business Objectives. In simpler words, an ERP is a massive software architecture that supports the streaming and distribution of geographically scattered enterprise wide information across all the functional units of a business house. It provides the business management executives with a comprehensive overview of the complete business execution which in turn influences their decisions in a productive way.

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At the core of ERP is a well managed centralized data repository which acquires information from and supply information into the fragmented applications operating on a universal computing platform. Information in large business organizations is accumulated on various servers across many functional units and sometimes separated by geographical boundaries. Such information islands can possibly service individual organizational units but fail to enhance enterprise wide performance, speed and competence. The term ERP originally referred to the way a large organization planned to use its organizational wide resources. Formerly, ERP systems were used in larger and more industrial types of companies. However, the use of ERP has changed radically over a period of few years. Today the term can be applied to any type of company, operating in any kind of field and of any magnitude. Today’s ERP software architecture can possibly envelop a broad range of enterprise wide functions and integrate them into a single unified database repository. For instance, functions such as Human Resources, Supply Chain Management, Customer Relationship Management, Finance, Manufacturing Warehouse Management and Logistics were all previously stand alone software applications, generally housed with their own applications, database and network, but today, they can all work under a single umbrella – the ERP architecture. In order for a software system to be considered ERP, it must provide a business with wide collection of functionalities supported by features like flexibility, modularity & openness, widespread, finest business processes and global focus. ERP systems can run on a variety of hardware and network configurations, typically employing a database to store data. ERP systems typically include the following characteristics: An integrated system that operates in (next to) real time, without relying on periodic updates.  A common database, that supports all applications.  A consistent look and feel throughout each module.  Installation of the system without elaborate application/data integration by the Information Technology (IT) department The Ideal ERP System An ERP system would qualify as the best model for enterprise wide solution architecture, if it chains all the below organizational processes together with a central database repository and a fused computing platform. 

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Manufacturing Engineering, resource & capacity planning, material planning, workflow management, shop floor management, quality control, bills of material, manufacturing process, etc. Financials Accounts payable, accounts receivable, fixed assets, general ledger, cash management, and billing (contract/service) Human Resource Recruitment, benefits, compensations, training, payroll, time and attendance, labour rules, people management Supply Chain Management Inventory management, supply chain planning, supplier scheduling, claim processing, sales order administration, procurement planning, transportation and distribution Projects Costing, billing, activity management, time and expense

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Customer Relationship Management Sales and marketing, service, commissions, customer contact and after sales support Data Warehouse Generally, this is an information storehouse that can be accessed by organizations, customers, suppliers and employees for their learning and orientation

Advantages of ERP Systems There are many advantages of implementing an EPR system. A few of them are listed below:      

A perfectly integrated system chaining all the functional areas together The capability to streamline different organizational processes and workflows The ability to effortlessly communicate information across various departments Improved efficiency, performance and productivity levels Enhanced tracking and forecasting Improved customer service and satisfaction

Disadvantages of ERP Systems     

The scope of customization is limited in several circumstances The present business processes have to be rethought to make them synchronize with the ERP ERP systems can be extremely expensive to implement There could be lack of continuous technical support ERP systems may be too rigid for specific organizations that are either new or want to move in a new direction in the near future

Supply Chain Management (SCM) Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain). Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally

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More common and accepted definitions of supply chain management are: Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole (Mentzer et al., 2001).  A customer focused definition is given by Hines "Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence costs must be lowered throughout the chain by driving out unnecessary costs and focusing attention on adding value. Throughput efficiency must be increased, bottlenecks removed and performance measurement must focus on total systems efficiency and equitable reward distribution to those in the supply chain adding value. The supply chain system must be responsive to customer requirements."  Global supply chain forum - supply chain management is the integration of key business processes across the supply chain for the purpose of creating value for customers and stakeholders (Lambert, 2008).  According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product and service offerings has been called the Extended Enterprise. Supply chain management must address the following problems: 





Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers. Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation

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



 

control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL). Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trade-offs are key to developing the most efficient and effective Logistics and SCM strategy. Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc. Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods. Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.

Functions of SCM Strategic level  



   

Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities. Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics. Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities. Information technology chain operations. Where-to-make and make-buy decisions. Aligning overall organizational strategy with supply strategy. It is for long term and needs resource commitment.

Tactical level Sourcing contracts and other purchasing decisions. Production decisions, including contracting, scheduling, and planning process definition.  Inventory decisions, including quantity, location, and quality of inventory.  Transportation strategy, including frequency, routes, and contracting.  Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise.  Milestone payments.  Focus on customer demand and Habits. Operational level  

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       



Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities, warehousing and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers. From production level to supply level accounting all transit damage cases & arrange to settlement at customer level by maintaining company loss through insurance company.

Multichannel CRM Multichannel CRM have developed over the last decade. It means managing CRM through multiple communication technological channels and multiple organizational touchpoints. It is necessary in order to deliver an enhanced customer experience, including a feeling of recognition and consistency of service across all service channels and touchpoints. These channel aims at giving customer as many choices as possible in order to put power in the customer’s hands. Web enabled self service allow customers to use vendor sites to change their own addresses and track their own orders and many are powerful search engines and other features to keep customer on their sites and keep them coming back. For example Petco(www.petco.com) offers pet lovers a community centre where they can chat with animal behaviour experts and access a range of articles. The site also features an online “pet yellow pages” where visitors can find a range of pet related services available near their home and even provides a way to donate money to the ASPCA online. Multiple communication technological channels

Whether the customer chooses to communicate with your organization by telephone, email, chat, face to face. CRM technology lets you create and track a consistent dialogue that reflects the value of the customer. Strategically significant customers may expect to get priority irrespective of the communication channel they choose. They expect their inbound telephone calls and emails to goto the top of the list. To achieve this in particular where email from high value customers take priority over telephone calls from lower value customers requires a central CRM database and a technology called universal queuing. Universal queuing lists all communications in a single queue irrespective of their origin or technology medium and prioritize response based on customer value. In 47

order to be effectively implemented universal queuing requires the integration of communication infrastructure (email, web systems, telephone) with the CRM application. Multiple organizational touchpoints

The communications with the customer take place not only in different technology channels, but also with different peoples with in your organizations. Marketing sending out customer offers, sales representative calls to negotiate terms and the customer calls the service desk for assistance. The marketing offer should be visible in order for the customer service agent to treat customer agent correctly. This is even more important if the service desk is to perform a blended function and cross sell the customer an offer at the end of service calls. Finally channel partners must be included in the communication loop if the channel conflicts over pricing, leads and commissions are to be avoided. The technology solution for multiple contact channels includes integrated suite of applications from all departments, customer and external web portals, universal implementation across the organization, synchronization technology and a central knowledge base for products, pricing and customer activity. While the technology challenges here are significant , the most difficult aspect of multiple contact channels is often the implementation of business processes across the departments, and externally to allow a consistent customer dialogue

CRM in B2B Markets Buying and selling of goods and services not only takes place between a consumer and a firm but also between two firms or businesses. A firm may buy raw material from the other firm or business to process it further or it may buy finished goods or even services to sell them to the consumers under its brand name. For example, Britannia Industries Limited buys flour from many flour mills to make biscuits, which are finally sold in the consumer as well as institutional markets. The business market comprises of all the organizations that buy goods and services for use in the production of other products and services that acquire end goods for the purpose of reselling or renting them to others at a profit. In the business buying process, business buyers determine which products and services their organizations need to purchase and then find, evaluate and choose among alternative suppliers and brands. Fundamentally business markets also involve the same factors as consumer markets do, there are some characteristics that make them unique. These include: 1. Market structure and demand: In a consumer market, there are usually many buyers i.e. individuals or households. However these buyers buy in less quantity. On the other hand, a business market contains a few but large buyers who buy in bulk. This increases the influence of these buyers on the market. For instance, business markets are more geographically concentrated depending on where the big buyers lie. To cite an example, chemical manufacturers are more concentrated in the western part of India. 2. Nature of the buying unit: A business purchase usually involves more buyers involved in the decision making process and a more professional purchasing effort. There are many purchasing agents whose entire professional life is

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3.

4.

5. 6.

dedicated towards buying in the business context. As the quantity of purchase and its value increases, the number of people involved in the purchase also tends to increase dramatically. The key players involved include technical experts, management and business markets and finally well trained sales persons. Type of decisions and the decision process: Business buyers have to make more complex decisions than consumer buyers. This is because the volume and the value of the purchases are quite high and they have to make complex economic and technical considerations. In the buyer’s organization, interactions continuously take place among many people across different levels with respect to the purchase decisions. The business buying process is more formalized than the consumer buying process because of the complexity involved. Decisions may be made after due considerations of all the factors and this may involve considerable time for deliberation. Finally in the business buying process, the buyer and the seller are much more dependent on each other. Therefore, many a time the business sellers directly work with their counterparts in the buying organizations. They help them make decisions by identifying and defining the problem, providing more information on the related products and informing them about the customization that could be made. Major Types of Buying situations in B2B contexts: There are many types of buying situations in B2B context. They differ from each other with respect to the kind of complexity associated with the decision making process. The amount of work that the buyer needs to put in before considering these purchases also varies. At one end of the spectrum is what is called the straight re-buy. This involves the buyer reordering something from its past supplier without any modifications. In modified re-buy, the buyer wants to modify the product specifications, prices, terms or suppliers. This process involves more decision making efforts. When a firm buys a service or a product for the first time then it is referred to as a new task situation. In this case, the cost or risk associated with the concerned purchase is more than the usual. In many situations, buyers prefer to a packaged solution from a single supplier instead of buying the component from various suppliers and then integrating them and are called as systems buying. Participants in the business buying process: In business organizations, major buying decisions are made by users, influencers, buyers, deciders, gatekeepers. The Business buying process: It is much more complex than the consumer buying process. It usually consists of eight stages starting from problem recognition, general need description, product specification, supplier search, proposal solicitation, performance review before making any purchase.

Importance of CRM in B2B markets 1. Focusing on key customers and building strong relationship with them 2. Proactively generate high levels of customer satisfaction with every interaction with the customer 3. Anticipate customer’s need by careful study of the environment, customer processes and their behaviour. The firm then responds to these needs even before the competition becomes aware of it.

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4. Finally, creating a value perception for the customer. The customer must see the relationship with the vendor as something that brings value and adds to their competitive advantage. Otherwise the customer will take the business elsewhere.

CRM Strategies in B2B markets Key Account Management (KAM) is one of the most popular and successful approaches for customer retention and development. It has been recognized as an important part of the customer relationship management in B2B marketing. A key account can be defined as a customer in B2B market identified by a selling firm as of strategic importance. It tends to be used interchangeably with other terms such as national accounts and major accounts. It typically focuses upon the geographical spread and size of customers, emphasizing criteria such as sales turnover, profitability, centralized planning systems etc. According to Millman national account can be classified as a subcategory of key accounts. Some sellers and vendors consider some customers as key accounts not because of their profitability which may be low but because of other issue such as prestige or reference value or because they permit access to new markets and technologies. Therefore these accounts are considered to be of strategic importance by seller. In KAM, Customers are segmented into different groups to identify the value placed on long term relationships with particular customers or customer groups. This is from the perspective of the customers and this exercise allows the setting up of KAM systems and the tailoring of customer retention strategies. This brings about stability to the company’s operation and the organization is able to capitalize upon the potential key accounts and use it to increase the share of profitable customers.

Partner Relationship Management As suppliers companies have realized the need to foster more productive between themselves and their channel partners, dealers and resellers. As with SRM, the Web provides these partners with automated access to centralized information and support resources, enabling them to deliver more accurate product information and better services to their customers. Partner relationship management is a subset of CRM that allows companies to ensure partner satisfaction. This usually means providing sales partners and resellers with the tools and information they need to • Access up-to-date product information, including release dates, defect data and marketing materials. • Communicate with support resources and offer online assistance with products and services • Reduce paperwork by obtaining online knowledge management resources such pricing revisions and sales contracts • Access a company’s supply chain network to check inventory, outstanding shipments and other order details.

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•

Download customizable sales presentations and other product marketing literature.

Some PRM products also help companies qualify and recruit new sales partners. Products like these help companies establish desirable partner attributes and allow them to assign partner categories that might limit partners to specific product assignments or sales strategies. PRM tools also provide partner profiles that enable a company not only to understand a business partner’s characteristics from their head quarters address to which competitive products the partner might be selling but also to track the partner’s overall success and contribution. Companies can use this information to further improve their partner relationships with additional training or joint marketing activities. Perhaps the highest impact use of PRM is its facility for automating lead distribution to the best partner. By providing analysis and reporting capabilities, companies can match partners with key sales leads based on their skills, geography, or areas of specialty. When a company’s marketing department receives a lead it can use a PRM tool to score the lead, allocate the lead to the best partner and subsequently track the lead through to its close. This results in efficiencies, lowering costs, triggering down towards pricing and higher customer profitability thereby giving rise to faster time to market having higher degree of customer satisfaction at the end of line. Unit-3

Analytical CRM The Case for Integrated Data A customer becomes savvier shoppers; they will continue to blend their purchasing and service habits. A busy executive who buys a video game for her child online while at the office might nevertheless check the status of her order from her Handspring palmtop while en route to the mall for a new set of golf clubs. Likewise a customer support agent needs to understand who’s at the other end when he picks up the headset for or initiates a live chat. The customer calling a toll-free 1800 number to make a purchase doesn’t care that your systems are at integrated-she assumes your company knows she’s made past purchases on your web site. In short, she expects you to know who she is. An e-tailer’s customer service department is using another vendor’s CRM tool for call center automation. Information about specific calls is loaded from the call center system into a database used by an analyst in the customer service department to evaluate trouble ticket resolutions. The analyst then gathers post facto customer feedback by sending customer satisfaction mailing to customers who have registered a certain type of complaint.

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Although both CRM environments have resulted in improvements in their respective departments the scenario as whole is actually risky. Bother marketing and customer support are well intentioned in their efforts to improve one to one communications with their respective customers. But what is the customer happens to be the same person? The risk here is that the marketing department might not recognized when customers within its targeted segment have contacted the call center with problems about a popular product and whether those customers are currently unhappy with the company. In such circumstances, cross-selling another product might do more harm than good. Conversely, the CSR responding to a complaint might not recognize that the customer on the telephone has made several purchases in the part week and falls into the company’s “GOLDEN CIRCLE” segment. Failure to escalate this customer’s complaint could mean losing a high value customer. Indeed applying the same rules to each customer is not only risky; it will put this company behind its competitors who are striving to differentiate customers and their treatment of them. Understanding the most recent interaction or touchpoint with the company-whether or not it was with the call center-can help the CSR determine how to best meet that customer’s needs. Even more important is the knowledge that the customer has a rich, multiyear purchase history. Purchase history can combine with other information such as whether the customer has recently moved, has college-age children, eats out often, and rates high 52

on the customer value scale. Such information can be summarized as a customer profile on the CSR’s screen or displayed as screen popup as soon as the call center system recognizes the customer’s incoming phone number. This scenario is a growing problem for companies deploying CRM. In their haste to adopt customer loyalty programs and increase retention rates, marketing departments are acquiring CRM tools without touching base with other areas of the company. Likewise customer support centers whose existing call center platforms might include supplementary CRM capabilities and who are likely to have already established customer communication procedures-might not account for the needs of their counterpart in sales or marketing before formalizing their own CRM initiatives. This problem is often due to company politics but more often due to diverse logical and infrastructure problems that mandate greater levels of customer knowledge and fast. The flaw with such a “stovepipe” approach to CRM is that the relationship with the customer is understood to be based on a subset of the customer’s actual interactions with the company. The company deploys CRM and bases decisions on a subset of these interactions. The resulting decisions-for instance, Marketing sending out a satisfaction survey a few weeks after the customer support survey is released could end alienating the customer rather than instilling loyalty. Multiple overlapping tools within a single company involve duplicate effort in technology acquisition, systems integration, installation, deployment and training not to mention multiple and often redundant investments. Likewise the lack of single CSR interface for customer data forces the CSR to access multiple systems to aggregate different information about the customer sometimes while the customer waits. After all, the majority of CRM products started out as so-called point solutions, designed to solve specific business functions such as sales force automation. Each of these products typically used a local database to store current customer information, hardly a flawed architecture. But the proliferation of these CRM tools around the enterprise begat assorted and mismatched customer files, all of which are critical to their respective systems but none of them are linked. Each database contains key customer information critical information critical to the purpose and functionality of the CRM system. The customer data in each database is different, depending on the requirements of the organization using its data. But as in real life, some organizations need the same data about customers; thus the SFA and contact center database both contain customer contact information as well as the payment status and the SFA and marketing databases each store sales revenue data. Though the name are the same, the contents and format of the data elements themselves are likely to be drastically different across systems. Availing a complete customer profile to a range of different organizations often means storing data in a centralized, cross-functional database known as a data warehouse. Once exclusive to the realm of large companies who had a burning need for strategic decision

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making as well as generous IT budgets, data warehouses have emerged over the past 15 year as the de facto platform on which companies store and analyze comprehensive data. This analysis is performed using application tools specially designed to deliver business intelligence. Though data warehouses can be used to store a wide cross section of subjects from sales compensation data to product specification to geographic mapping, they are particularly valuable for offering an integrated view of the customer or in data warehouse parlance “a single version of the truth”. Information stored on data warehouses originates from various systems across the company, providing a true 360-view of activity, both current and historic. Such source systems include any of the following: • • • • • • • • • •

Billing systems Order and provisioning systems Enterprise resource planning systems Human resource systems Point of sale Web servers Marketing databases Call center systems Corporate financial packages External data providers.

The greater the number of subject sources for a data warehouse, the richer the information available to the business.

Integration of customer Data data on warehouse data warehouse

Demographics Survey Responses Purchase Data Campaign Responses Billing and Payments Web activity Returns Call center contacts

One of the strengths of a data warehouse is in its ability to store large quantities of historical data, enabling companies to compare customer behaviors over time. For instance, by storing customer purchase history, a company can evaluate what might have

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attracted a customer to making a purchase or gauge whether that customer’s purchases are increasing or decreasing. Comparing time variant data can provide the company with the information it needs to deploy intelligent marketing and sales campaigns and offer customers appropriate levels of service. Storing historical customer data is the main reason for the enormous growth of data warehouses, both literally and figuratively. In the early days of CRM, industry experts were celebrating CRM products for their automation of previously manual tasks. Today however many of these systems have simply perpetuated the “stovepipe syndrome” of proliferating to a small subset of business users. Thus most industry analysts have changed their tune, calling for integrated data as a CRM critical success factor. Integrated customer data is mandatory for a company to server its customers well. Motivating the customer to come back-means understanding more than a customer’s name, current address and income level. It means knowing his preferred products, his consumption rates, values, lifestyles, life stage and even a superset of his behavior outside of his relationship with the company.

CRM and the Data Warehouse The best intentioned companies often slip up when it comes to providing data warehousing and the accompanying business intelligence capabilities to their business users. On the one hand, the IT department understands that data can not be divorced from CRM and that the corporate data warehouse is the ideal CRM source system. On the other hand, the business community is pushing for a quick win and doesn’t care where the data comes from as long as they get it fast. The business begins using its CRM application without a vision for how to drive ongoing business process improvements. IT scrambles to provide enterprise data to the CRM application without understanding which data will support the actions and business processes the business wants to improve. The businesspeople keep asking when it will all be finished. So begins the slippery slope of the CRM point solution. As the data warehousing community saw with its stovepipe data marts that effectively served organizational needs but were tough to link together, stovepipe CRM systems represents the burgeoning for many companies even those with robust, enterprise wide data infrastructure. Data warehouses provide a rich source of analysis for a range of topics: • Customer focused data • product defect data • welfare claims • criminal records • human gene sequences

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Perhaps the most challenging problems posed by stovepipe CRM environments is that they prevent the company from knowing certain potentially critical facts. From the disconnected environments, it is clear that some important business questions cannot be easily answered. • • • • • • • •

A CSR scheduling a follow-up communication with a customer cannot discern that the customer’s value score to determine the level of service that should be provided A segment manager cannot track a customer’s complaint history before trying to cross-sell a product The campaign staff in marketing doesn’t want to solicit customers who are late paying their bills. An account representative has no idea whether a key business customer has responded to certain key promotion A CSR cannot see the full list of products a customer might have so she can determine whether a give trouble ticket applies to more than one. A customer support analyst tries in vain to measure complaint history against sales revenue for a given product A marketing data analyst lacks the data necessary to understand the role of the company’s key sales contact for customers in the segment with the highest sales revenues. A customer support executives cannot obtain a regular report on average customer satisfaction survey scores for each customer segment.

The customer information that can provide answers to these and other business questions can drive key decisions about: • Customer treatment • Sales techniques • Upcoming promotion strategies etc By integrating operational CRM data with information from around the enterprise, companies can begin performing analytical CRM and with it make truly customer centric business decisions. The practice of data analysis predates even databases and transcends data warehousing and CRM. Many CRM vendors have incorporated analysis into their products thereby offering the ability not only to perform key CRM business processes but also to apply business intelligence to these CRM functions to make them more accurate and more valuable. With analytical CRM, users can predictive modeling into its toolset • To provide a list of customers most likely to respond to a given marketing campaign • Purchase pattern recognition into their offerings

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• • • •

•

Enables marketing and sales staff to compare customers with like behaviors so that they can position new products to an optimal audience Organization can maintain a progressive relationship with a customer Able to track a range of customer actions and events over time Provides 360 degree view which emphasizes communicating with customer across channels based on the optimization of relevant and two-way personalized interactions through a new marketing campaign or from a caller’s complaint history. Offers the ability to transcend more broad-brush customer segmentation and deploy customer communication that are truly one to one

With both operational and analytical CRM capabilities organizations are changing business strategies to: 1. Reward customers with personalized discounts and perks for using lower cost channels 2. Proactively offer products and services that fit a given customer’s needs based on what the customer has already purchased 3. Increase purchase rates by dynamically personalizing content based on the Web visitor’s profile 4. Adjust per customer marketing expenditures based on life time value scores 5. Analyze combinations of touchpoints across channels to predict customers’s next likely purchase. 6. Relate high web traffic to individual visitors and customer segments to better understand Web use and improve web design 7. Tailor commissions and incentive programs for sales partners based on the value of the customers they bring 8. Prevent a customer from churning by offering incentives based on individual preferences 9. Provide customers in the highest value tier with personal representatives who understand their history and preferences. Operational CRM

Enterpise Data

Activity Management Contact Management Pricing and Configuration SRM PRM Campaign Management Customer Support

Billing Product Financial Aspects SCM ERP E-commerce

Analytical CRM=Enterpise Data + Operational CRM Workforce Automation Customer Profiling Partner Contribution Measurement Revenue analysis Customer segmentation Channel Analysis Supplier Evaluation Campaign Measurement 57

Prospect qualification Churn analysis and prediction Propensity to buy modeling Customer value measurement Risk scoring With seamless user interface, CRM users cannot only share data but can actually run the CRM modules. A marketing person can look at customer’s contact data through the same application used by the sales force. Likewise analysts within the company can access a centralized CRM portal to view a range of customer related data without having to change application tools. New eCRM product provides a central portal through which marketers can create and view customer segments, monitor campaigns in real time and generate a variety of customer reports. These are also called as business intelligence software, which combines powerful analytical capabilities to interrelate CRM functions such as Web traffic analysis and marketing campaign.

Major Types of Data Analysis The integration of operational and analytical CRM applies across channels. Web is more than just a communication channel for most companies-it is a rich source of data, offering customer behavior information. A few emerging analysis techniques heavily leverage enterprise wide data particularly collect on Web. OLAP (Online Analytical Processing) The term “drill down” is more appropriately applied to the practice of Online analytical processing called as OLAP. OLAP has become the most popular type of decision support analysis, allowing the average business person to explore data online with the aim of focusing on detailed data at a lower and lower level of the data hierarchy. This means generating an online report, analyzing the results and submitting a more detailed query in order to understand the result data. OLAP generally focuses on providing a set of data attributes from a database organized around certain dimensions such as time and location. Thus, a user can request the company’s regional sales revenues for all baby care products by region or by store. He can request a report detailing regional revenues for each month within a quarter. OLAP generally requires the analyst to have a query or hypothesis in mind. With an OLAP tool, the analyst would have to guess which products a home office worker would purchase and then identify customers making such a purchase.

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Data Mining in CRM Data mining tools identify patterns in data and deliver valuable new information that increase a company’s understanding of itself and its customers. Data mining is commonly used to help data analysts search for information they don’t yet know to look for, often involving no hypothesis. It has helped companies uncover a diverse set of new knowledge, from a customer next purchase to optimal store layouts to the most favourable release data for a movie in preproduction. Data mining involves the identification of meaningful patterns and rules from detailed data usually from large amounts of data. Thus instead of analyzing customer segments to determine who is likely to churn as with OLAP data mining would examine individual customers, touching each of the millions of records in a database. There are many different types of data mining algorithms, some of them are: 1. Prediction: The use of historical data to determine future behaviors. Predictive modeling generates output that populates a model or structure to represent the results. For instance a predictive model can indicate the next product a customer is most like to purchase based on historical purchases by that customer and other customers who have purchased the same products. 2. Sequence: Sequential analysis identifies combination of activities that occur in a particular order. Businesses use sequential analysis to determine whether customers are doing things in a particular order. It can help a business distill behavior from events captured from various operational systems around a company to determine patterns. For example, a bank or telephone company can learn more about a given customer or customer segment by examining patterns in the slowdown of purchases or in service cancellation. 3. Association: Association analysis detects groups of similar items or events. It can be used to detect items or events that occur together. The association algorithm is often applied to market basket analysis to help businesses understand products being purchased together. By understanding customer and product affinities, a company can make important decisions about which products to advertise or discount and which customers should be targeted for certain products. One central difference between data mining and other types of decision support analysis is that data mining usually involves statisticians or product specialists intimate with the use of correct algorithms and their application to business problems as well as with the specific data mining software. Although a business person rarely mines the data herself, she might use data mining results either represented graphically in a visualization tool or deployed to a database for general query access – to help make important decision about managing customer relationships. There are numerous uses for the three types of data mining •

To target brand new customers by modeling existing customers response patterns

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• • • •

To avoid high risk prospects through risk prediction or forecasting a customer lifetime value To build customer models and explore various customer behavior patterns To experiment with pricing plans To create dynamic customer segments for testing new campaigns and performing what-if analysis

Applications of Data Mining 1. Clickstream analysis: It connotes how the user arrived at the site, how long he stayed, what he did during his visit and when he returned. They are the equivalent of camera in a department store recording a shopper’s every move. It usually stored either as part of a company’s data warehouse or in a dedicated clickstream data store sometimes called a “data webhouse”. A Clickstream is the recording of what a computer user clicks on while Web browsing or using another software application. As the user clicks anywhere in the webpage or application, the action is logged on a client or inside the Web server, as well as possibly the Web browser, routers, proxy servers, and ad servers. Clickstream analysis is useful for Web activity analysis, software testing, market research, and for analyzing employee productivity. Since the business world is quickly evolving into a state of e-commerce, analyzing the data of clients that visit a company website is becoming a necessity in order to remain competitive. This analysis can be used to generate two findings for the company, the first being an analysis of a user’s clickstream while using a website to reveal usage patterns, which in turn gives a heightened understanding of customer behaviour. This use of the analysis creates a user profile that aids in understanding the types of people that visit a company’s website. As discussed in Van den Poel & Buckinx (2005), clickstream analysis can be used to predict whether a customer is likely to purchase from an e-commerce website. Clickstream analysis can also be used to improve customer satisfaction with the website and with the company itself. Both of these uses generate a huge business advantage. It can also be used to assess the effectiveness of advertising on a web page or site. For example, one client of mine, a general merchandise retailer who has joined the e-tailing ranks wants its website to be as sticky as possible and has begun prematurely. The company has sharpened its analysis to determine the value of abandoned shopping carts. When a customer leaves the site in the midst of a shopping trip, whatever the reason, the company looks to see what products were in the cart. The data is then compared with similar data from other abandoned carts to examine. • •

How much revenue the abandoned carts represented Whether the products in the cart were high products in the cart were high profit items or loss leaders 60

• •

If the same products were found in other abandoned carts. The volume of products and the number of different product categories in the cart • Whether the total bill for the abandoned carts consistently fell within a certain dollar range. • At what point during the shopping trip the cart was actually abandoned • How the average and total bills for abandoned carts compared with unabandoned carts-those that that made it through the checkout process. The result of this analysis can trigger some interesting theories • • • •

Perhaps none of the products in the cart was appealing enough to a particular customer to motivate her to continue shopping The customer was putoff by frequent inquiries asking her whether she was ready to check out Possibly at a particular dollar total, the customer thought the better of the entire shopping trip and bailed. Perhaps the number of products in the cart reminded the customer of another site that offered a steeper discount for similar purchases.

Clickstream analysis can help the manager in following ways: •

It can reveal some interesting patters i.e. reasons for leaving the site by customers

•

Can use results to tweak the design and content of its web site and monitor resulting improvements

•

Patterns might indicate product affinities, suggesting cross selling and up selling strategies

•

With Customer demographics, psychographics and past behaviors, click stream data can bring the understanding of customer behavior to a whole new level.

•

To provide a holistic view of that customer’s value and interests.

•

Clickstream data when integrated with other key data from around the enterprise enhances opportunities to personalize customer communications.

But understanding a customer’s navigation around a site can help a company decide how to lure him back •

Company’s usual tactic for all registered visitors who visit the site but don’t make a purchase is to mail them a discount coupon which gives a unique code so no one but the given customer can redeem it

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• • •

Emailing is the lower cost option for contacting customer Placing more customized ad banners on the partner’s site and even provide better financial incentive for the partner when customer click through. Donot allow customer to become cherry picker

Personalization and Collaborative filtering Personalization, the practice of tailoring communication directly to a customer segment or increasingly to an individual customer. The premise of personalization is that by collecting sufficient customer data a company can market to an individual’s unique needs both new and in the future. Personalized communications is the principal technique via which companies can convince customers they understand them and that their information-which the company often uses thanks to the customer’s explicit permission is mutually beneficial. The goal is to deliver accurate product recommendations content geared to individual preferences and targeted promotions for individual web visitors. Personalization not only maintaining customer loyalty but also driving purchases higher. It leverages detailed information about individuals and dictate some very tactical decisions. The following analysis topics from a drugstore e-tailer suggest the level of individual detail and resulting tactics personalization can provide: • • • •

For people who have bought or expressed interest in vitamin supplements, which other products are they likely to buy? How likely is Customer X to buy prescription drugs online? What other items are likely to be in a shopper’s market basket if he buys say decongestant? Which products are most similar to the Brand X eyedrops the customer chose?

Personalization can take various forms. It can involve customizing actual web pages including a Web site look and feel according to the features favored by an individual visitor. Many web sites allow the visitor to customize the site according to her preferences, eliminating format variations and allowing her a private window into the company. There are two main types of personalization 1. Rules based personalization: It leverages established rules that dictate for instance which products might be purchased together or whether a certain web page should precede or follow another. It most often involves rules that have been hard coded in to the software. For this reason its often difficult to maintain and support. For example when a visitor to a software web site buys the Quicken, the site might suggest he buy Quicken: The official guide before going to the checkout screen. 2. Adaptive personalization: It learn as it goes. Most commonly known as collaborative filtering, this type of personalization gets smarter as it observes customer behaviors and applies them to new circumstances. For example, if a 62

gardening e-tailer using collaborative filtering observes that shoppers tend to buy low cost perennial flowers at the same time they order gardening tools, the website might begin suggesting a flat of pansies to all customers who buy bulb planters. Collaborative filtering uses the behavior of other “like” visitors as the basis for its recommendations. Collaborative filtering tools are often more complex, and thus more expensive than rules based personalization. The most celebrated example of collaborative filtering is Amazon.com’s purchase circles in which Amazon factors in the buyer’s purchases and geography to suggest what readers who live in her neighborhood and have similar interests might be reading. The more similar shoppers buy the smarter Amazon becomes about their preferences and the more accurate are the site’s recommendations. Advantages of Personalization 1. The company will use the information to provide a value added service such as periodic discounts or special news letters 2. Gives look and feel to customer according to favored features 3. Personalization can customize content and screen layouts for individual visitors to increase the site’s stickiness 4. Personalization can increase the shopper’s propensity to buy. 5. It can offer various product combinations and solicits their feedback 6. It stores customer’s responses to questions or surveys making those answers part of her profile so they can be used to cross sell her additional products. 7. It allow sellers the opportunity to differentiate customers and their price sensitivity. 8. It introduces the concept of dynamic pricing, it actually leverages CRM technology and detailed customer data to let a company say compare a shopper’s desire for the product with his perceived ability to pay for that product.

Analysis checklist for success Integrating data from around the company, let alone using that data to drive sophisticated analysis that can differentiate you from your competition is a lofty CRM objectives. •

• •

Don’t underestimate data integration: integrated customer data can mean the difference between a decision that alienate a customer and one that triggers long term loyalty. But even the best CRM suite products don’t offer easy answers on how to integrate disparate data from around your company. Talk to vendors about their databases and their processes for systematically locating, gathering, modeling, cleansing and loading data into a database or datawarehouse. Beware of “dirty data”: That means data in its natural state prior to being cleansed and formatted for use by businesspeople. If your company has a datawarehouse reinvest in it now: Proper infrastructural support must be given

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• •

•

Know who’s analyzing the data: Understand which users are actually performing analytical CRM the data they are looking at and what results from their work. Translate analysis into action: Many companies with really big databases and really neat end user tools nevertheless ignore what their data tells them. Even though they have rich customer information, they continue to rely disproportionately on the appointment books of their salespeople to generate leads and on executive golf outings to nurture alliance partnerships. Know your current customer focused initiatives and which one could be improved with analysis, empowering the business people to actually make decisions. Don’t forget business processes: Effectively managing and enhancing customer relationships has much to do with work process improvements. Performing analytical CRM means understanding how your customers interact with you and using this refine business process to provide them better experience. Analytical CRM should be used to improve business processes, streamline workflows, establish sound policies and accelerate customer purchases.

End to End CRM Infrastructure

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Planning your CRM program Planning a CRM program can be as simple as building consensus over a series of meetings with key stakeholders who have all have vested interest in keeping customers. It can be as complex as launching a multi-month project to gather requirements from across the company, interview stakeholders and draft a game plan working with staff members who might not have ever heard of CRM. CRM engenders business change, and business change is just a by-product of CRM and it is one of the goals of CRM. Good planning can make or break a CRM initiative, planning involves more than simply drafting a list of actions. A CRM program requires: • a clear understanding of and commitment to the company’s focus • Vigilant adherence to detailed goals • Commitment from both executives and line workers • Constant awareness of the customer’s viewpoint CRM is not a single product or technology. It is not exclusive to marketing or customer care. And it ideally involves a cross-section of customer touchpoints. The ability to understand customers across their various interactions with the company, meaning that the organizational boundaries of CRM should be understood upfront. Indeed the entire company – from executives to programmers should agree on a unified CRM vision. The pressure is on for those forward thinking managers who can articulate that vision but lack the organizational buy-in to enact a truly corporate wide program. The payoff of such foresight could be revolutionary-employees from across the company accessing common data about customers through a single enterprise portal and making better decisions based on a single view. This is called single version of the customer truth and using it to increase customer profitability. Launch a CRM pilot project for single department to actually prove CRM’s benefits in a couple of months. The majority of successful CRM projects have started out as Stovepipe projects in business units. They began in a single organization perhaps marketing where a visionary manager recognizes the benefits early and enlists the IT organization in developing a standalone CRM system. Once deployed, the system generates efficiencies while delivering value. People in other departments gradually take notice, either because the CRM users tout their success or because the benefits get noticed. Other organizations eventually request access to the CRM system, which gradually grows horizontally with additional functionality data and users. Enterprise CRM is such a vision doesn’t happen overnight and trying to force it happen could take a life time. The better your view of how a finite and clearly described CRM 65

solution can help deliver long term benefits to the company, the more likely you are to get the support you need.

Gauging the Factors of CRM success Factor Initial Trigger

Sponsorship

Ideal An executive or board member reads about CRM and understands how its benefits can result in competitive advantage

Desirable A customer support executive returns from an industry conference where a case study depicted uplift in existing sales via CRM A cross functional A business executive team agrees that visionary sees CRM is a competitive quantifiable benefits necessity for the organization in the short term and for the company at large soon after

Objective definition

Increased customer loyalty, better customer service, additional sales revenue and an overall enhancement of external perception

Solution selection

Allowing corporate strategy and business drivers to dictate CRM functionality and letting required functionality dictate tool Integration of CRM product into existing IT infrastructure, including ERP and data warehouse systems

Operating environment

User community

Employees across the corporation at all levels using CRM for different purposes but basing their decisions on the same customer information

To provide an organization with a greater degree of customer knowledge and improved customer interactions Tool delivers process efficiencies while applying additional customer intelligence via integrated data Introduction of dedicated CRM environment linked to corporate network and key data sources Business people from one or two departments leveraging operational and analytical CRM

Undesirable A product manager sees a vendor demo and returns to the office touting functions and features The IT organization decides to implement CRM system because an existing vendor has just substantially discounted its CRM software To automate existing processesespecially if they are not costly to begin with. Or to add CRM technology to the IT portfolio. Selection of CRM market leader or existing software vendor with minimal research. Standalone systems

CRM

Operational CRM available to select group of users who disperse findings from time to time to selected executives

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Efficiencies

Process efficiencies and integrated data combine to deliver strategic decisions in turn leading to higher customer profitability, sales uplift, and customer satisfaction

Measurement

Clear sales uplift or decrease complaints and measurable improvement in customer response rate across touchpoints

Automation leads to process efficiencies and new information that advance departmental goals and result in improved customer satisfaction Improved perception among existing customer based and suspected improvements in marketing campaigns closed sales, product quality and so on

on paper Automation leads to process efficiencies resulting in timesaving but failing to cover CRM program expenses IT has successfully linked the CRM system to operational systems and has deployed CRM to desktops.

Four overarching measurements for CRM success 1. 2. 3. 4.

CRM’s ability to impact corporate strategy Successful technology integration Enhanced strategic partnerships Assimilation of CRM related technologies

The point here is that companies implementing CRM understand that the means to the end doesn’t matter-it’s the program’s ultimate strategic impact and the usefulness of the resulting tool set that affect the perception of success. If the customer profiling provides new details about customer behaviour but cannot be viewed by call center staff is a flop.

From operation to Enterprise: An implementation Scenario Indeed CRM can be both revolution and evolution. A single department can adopt a CRM program that promises value to other organizations, which averse to starting from scratch-grab the proverbial CRM ball and run with it. Because the company’s customer support organization required basic information about customers and trouble tickets, it was the first department to recognize the value of combining operational CRM- the company was surveying customers at the conclusions of every web or telephone based contact and tracking customer satisfaction scores with analytical CRM to streamline its call center processes.

The call center adopts CRM 67

Objective Organization Customer satisfaction monitoring Self service efficiencies Faster trouble ticket resolution

Call Center

Data Trouble Tickets Customer Name/Address Customer satisfaction scores elementary Web access mails

The call center’s goal was to survey scores to analyze customer complaints and foster product and service improvements while simultaneously putting in a place a Web-based customer self service infrastructure. Over time, the company’s customer would be able to request service on the company’s website, mitigating the need for in person assistance in addition to being able to order new services and add on features such as caller-id. Customer support recognized the promise of not only cost reduction but also higher customer retention rates. Soon after launching the project, customer support got the attention of the company’s marketing department which as interested in the satisfaction scores and their correlation to certain customer segments. Marketing convinced call center to share its data which existed on a server accessible by the call center transaction system. Marketing purchased an additional module from the company’s CRM vendor in order to perform dynamic customer segmentation and begin more targeted customer communication and campaigns.

The marketing adopts CRM Objective More targeted mailings Customer satisfaction by segment analysis Refined marketing campaigns

Organization

Marketing Call center

Data Customer segments Mailing history Response Rates

The advantages of this building block approach: • •

Marketing could leverage the CRM product, system resources and data the call center was using Supplement the call center’s database with additional data, marketing was providing call center employees rich customer information that they could in turn use to qualify higher value customer at the time of contact.

As the call center and marketing organizations becomes more integrated the two departments realized they could be even more customer focused with more data and

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processing power, and they lobbied upper management for budget money, citing the benefits already gained by cross functional CRM. By leveraging a centralized customer database, sales could deploy SFA across regions and territories, ensuring access to richer base of customer data-data tat already existed on what was now known as the CRM server. The company’s IT department ran a synchronization program that reconciled customer data from each salesperson with the customer data on the CRM server. Due to new sales data added to the CRM system, sales staff in the field could not only access a centralized customer data but track outbound correspondence their customers might have received from the call center and marketing organizations

The Sales adopts CRM Objective Streamline sales process Qualify prospects based on past success Track contact history

Organization

Sales Marketing Call center

Data Sales Activities Order Contacts and prospects

The call center could use the new sales data to track trouble tickets on recently placed orders and could tell whether the part calling was on existing customers, a prospect or a lapsed customer. Call center management implement call center scripts according to the caller’s customer segment and status guiding CSR in responding to customer contacts in a way that was tailored to each customer segment. Marketing too was able to use the new sales information to close the loop, tracking campaign responses through to actual orders. Campaign managers could refine their campaigns now that they knew which customer segments ordered which products, and through which channels. This in turn allowed the marketing organizations to establish a segment marketing function wherein specific customer segments were managed and communicated with separately. With this information in hand marketing could interact more effectively with sales and channel partners about the optimal sales, given a prospect’s profile and characteristics.

Enterprise CRM Objective Track installations Track repair status

Organization

Field services Sales Marketing Call center

Data Equipment outage Order and repair data

After the call center brought CRM online, the marketing department was able to demonstrate lower customer attrition directly attributable to preemptive targeted 69

communications with at risk customers. Marketing has never planned on stemming customer attrition, let alone quantifying the improvements. The wireless service providers continues to enrich its CRM capabilities, regularly measuring profitability gains as a result of increasing customer loyalty and is now making information on the CRM server available to its financial and executive organizations.

Determining CRM Complexity The key to planning CRM initiative is in the ability to deconstruct it into manageable pieces. A CRM initiative complexity relies on two main metrics: 1. Quantity of functions: If your CRM objective is simply to deliver customer profiling, you probably have a single function. If it’s to automate you campaign management. You will likely have at least a handful of functions to implement. 2. Ranges of usage: How many departments are slated to use the CRM system after it is up and running? Implementing CRM for a single relatively small department is much less complex than deploying it to the entire enterprise. The contrast among the four quadrants is stark and has significance impact on the development process. 1. A single function CRM project to one department is nothing more than a customer focused application. It is most likely driven by a handful of business people and managers not corporate executives and will be used by a single organization. You will probably be able leverage a series of in-house development processes and existing staff to deliver single function CRM to the department that needs it. 2. A multifunction CRM project to a single department is another story. Instituting a customer focused contact center dictates a range of new range of new customer oriented business processes, not mention new policies and end user training. Defining and documenting business processes will give a good idea of CRM system’s true complexity and the development resources it requires. 3. Conversely, a single CRM function to be deployed across the company represents a newly institutionalized business function. If the call center, marketing, risk management, and sales organization have each requested customer life time value information, a simple function takes on additional complexity because it involves multiple departments and thus varied business requirements. This additional complexity will likely require additional development resources and longer upfront planning. 4. The most complex type of CRM is multifunctional and multidepartmental or enterprise wide. This means deploying a new range of business functions across the company to a variety of business people for a variety of purposes. Requirements will be complex as will the technology to enable CRM. The

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complexity suggests a variety of development resources and a range of CRM technologies from CRM product suites to Internet access to data warehousing.

Preparing the CRM Business Plan A CRM business plan includes several discrete components that when combined explained the value proposition and tactical implementation plan for CRM. Understanding the program approval process in the company will take a long way toward creating a solid and useful business plan. As with the wireless company, many companies have governance committees made up of executives from various organizations. These executives based on the content of the business plan as well as formal pitch from the program’s sponsor. Funding is allocated to a variety of factors. The factors are:  The requirement for new technologies  The impact on existing technologies  Ongoing support and maintenance requirements  CRM alternatives

Typical CRM Approval Factors Evaluation Factor Explanation The program’s long term Why the proposed CRM value initiative will have long term, sustainable value to the company Its adherence to company How CRM pertains to the objectives company’s stated goals or overarching strategies

Its ability to deliver key How specific business business objectives goals will be met with CRM

Its cost

An estimate of the cost breakdown

Examples Marketing’s CRM initiative is estimated to increase target marketing response rate by 50% delivering annual net revenue gains of approximately $14 million An enterprise CRM will allow us to achieve our objectives of exceeding 40% market share through decreased attrition levels and more successful marketing campaigns CRM will allow the company to adopt true one to one relationships with our customers by delivering both personalization on our website and real time customers profiling capabilities for our call center staff During the next fiscal year the proposed CRM is estimated to need $1.5 million in funding technology and addition $1 million for permanent head count $1.5 million for 71

Its boundaries

An explanation of the initial CRM project’s resulting deliverable

Staffing requirements

A list of necessary staff for requirements gathering, technology acquisition, development and roll out of CRM solution

Risk Assessment

A description of the potential risks involved in launching a CRM program at this time

consulting services and a half million for external data acquisition The initial release of the eCRM program will include the deployment of IVR service, Web enabled provisioning and Web FAQ services to alleviate demands on the contact center In addition to the current CRM SWAT team, we estimate the need for  A CRM development manager  Two CRM product specialists  A CRM architect We foresee the ebusiness organizations historical reluctance to share its data as a likely impediment to sales department access to existing customers web purchase and self service history, rendering customer history profiles incomplete and the resulting decisions potentially faulty

CRM Readiness Evaluation Metrics S.no Factor 1 Targeted business users display an understanding of CRM and accompanying its benefits 2 Management displays an understanding of CRM and companying its benefits 3

CRM opportunities identifiable

Explanation Are the business people slated to use CRM after it’s deployed aware of its intended improvements?

Not only must executives understand what CRM means; they should also understand its value proposition and be able to articulate it consistently. And they should understand which corporate objectives depends on CRM application The business areas most in need of CRM should be are identified along with the projected deliverables

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A business sponsor exists Staff members in the trenches, irrespective of their for each discrete CRM need for more customer intelligence are not enough opportunity someone in management should be lobbying for CRM willing to tie his goals to CRM and even willing to fund it Obvious stakeholdership Are there other people within each candidate exists for each discrete business unit who will support or help deliver a CRM project? Are these people in the majority? Client has expressed a need Management should be able to tie CRM and its for market differentiation benefits back to the company’s competitive goals and understand how CRM can help differentiate customers Communicated strategic If the company has a list of strategic objectives initiatives can be supported those objectives should be customer focused and by CRM thus supported by CRM Stakeholders can articulate Business sponsors or management should be able to projected CRM benefits for describe the tactical business improvements that can each discrete opportunity be delivered by CRM Stated opportunities can be The CRM opportunities being discussed must be improved with customer able to be supported and improved with clear, related data consolidated customer data Projected data sources are Where will the customer profiles and segments highly regarded for data originate? If those systems are not trustworthy no accuracy and integrity one will trust the ultimate CRM applications Cross functional customer A data warehouse containing consolidated customer data exists in a data information around the company will jump start any warehouse CRM program and will decrease the infrastructure cost Organizations currently Has data sharing been institutionalized already with share a cross section of other systems? information requirements The client is already If customer segments are already being identified, engaging in some sort of there is an understanding of customer customer differentiation or differentiation which makes CRM much more segmentation culturally palatable Business units and IT staff The extent to which one organization wants to own agree on CRM ownership CRM is the extent to which politics will get in the way of productivity Executive management has Executives should understand not only that CRM expressed commitment to involves a significant investment but that additional fund CRM related activities funding might also need to be reserved Client agrees to modify Access to complete customer data should trigger business processes as a business efficiencies result of CRM IT staffing infrastructure is Although CRM might leverage skill set and in place to support CRM knowledge from other IT areas, it should be 73

planned as a discrete Beware the tail that wags the dog: are stakeholders communicating CRM requirements based on a product demo or sales pitch Like other large corporative initiatives CRM is an ongoing process that grows and improves over time

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No decisions have been made about potential CRM technology solutions There is consensus that CRM is process and not a one time activity There is willingness to Management should be aware that along with more sustain the organizational data and process changes job roles might change impact of CRM and new skills might be needed

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Maintaining a Customer Focus: Requirements Driven Product Selection • • • •

CRM should always be aligned to corporate strategic objectives i.e. customer focused strategy. For example the ability to track the success of target marketing campaign Planning a straightforward CRM solution CRM system should be cross functional Understanding of right technology which your company needs for implementation of CRM

Defining CRM functionality As the requirements define the “what” functionality defines the “how”. Each function should map back to a business requirement. Identify the best way to map the functionality to business process. To illustrate how this works, consider the following example. A major bank was discovering that many of its customers did business with other financial institutions and already had the product being marketed. If the bank’s customers did not opt for the first marketed alternative, telemarketers would have the option, depending on the customer’s interest level, to make subsequent recommendations. The bank decided to use CRM to generate a list of five different product recommendations for each customer, based on that customer’s likelihood to buy them. For this to work, the process had to involve these steps: 1. Analyse customer purchase history to understand the most frequently purchase products by other like customers 2. Score the likelihood that a customer will buy an individual product 3. Communicate resulting customer list and product scores to call center application system. 4. Collect response rates 5. Refine scores based on campaign results. Requirements + process = functionality

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Best way to find the CRM products that offer your required functionality • • • • • • • • •

CRM conferences Analysts firms specializing in CRM such as Yankee group, META group Trade shows Consulting firms specializing in CRM Trade publications, particularly those that perform product reviews such as Intelligent Enterprise Internal IT organization Vendors seminars CRM websites Business magazines, particularly those that review IT vendor companies

Defining Technical Requirements 1. Integration and connection requirements: Ability of the tool to integrate into the company’s unique technology infrastructure from a hardware, software and networking perspective. • Support of windows 98 client OS • Ability of the CRM product to interact with your existing database system • Conformance to company sanctioned open standards • Ability to interface with in house telephony package to support CSR specific call routing and web based live chat • Ability to integrate with other applications • Product extensibility and customization features • Inclusion of a published data model that can be customized and extended to meet business specific data requirements 2. Processing and Performance requirements: Indicate the product’s ability to support and control required operations a. Number of transactions the product can support b. Data volumes the product can support c. Number of concurrent users that can be supported d. Support of data and system backups e. Synchronization strategy and efforts required f. Ability to send and receive data to and from the data warehouse 3. Security requirement: The product’s ability to limit user access a. Provision of usage and access reporting on a per user basis b. Provision of access restrictions an a per user basis c. Usage management at the individual, departmental or CRM screen level d. Password encryption e. Ability to provide limited data access to non company users 4. Reporting requirements: The product’s versatility to provide company and user requested information a. Ability to push pre formatted reports to end users 75

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b. Ability for end users to perform ad hoc reporting c. Allowing for end user creation of local canned reports d. Ability for end users to extract data for local analysis Usability requirements: Enabling end users to easily and intuitively accomplish required tasks: a. Ability for end users to have a customer home page b. Ability for end users to seamlessly access other corporate systems through a common CRM portal c. Ability to customize online help screens with application specific information d. Ability to perform screen prints e. Ability to display graphics, pictures and photographs Function enabling features: The way in which the product provides certain required functionality a. A workflow management, capability, including the support and automation of user defined workflows b. An email response engine able to route incoming emails to specific CSRs c. Predictive modeling functionality d. Support of wireless access to CRM server Performance requirements: Laying out acceptable turnaround time for CRM activities or reporting response time a. Ability to provide 30 second or less reporting response time for internet users b. Ability to generate campaign lists, irrespective of attributes within one hour or less Availability requirements: Indicating the acceptable level of system availability. For example: a. Product and accompanying database both available from 8a.m. to 8p.m. seven days a week b. Inclusion of self diagnostic tools that can alert system administrators to slow response or likely downtime c. Accommodation of different time zones if your company is geographically dispersed d. Web page availability 24 by 7

Development Approaches Homegrown CRM Most CRM development efforts involve some level of software customization be it to integrate the call center CRM system with marketing’s campaign management software or to change data names, they begin with a core product that provides the foundation from which to customize. Developing CRM software from scratch is called Homegrown CRM. Companies develop their own homegrown CRM systems for the following four main reasons:

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1. They require core CRM functionality that did not exist at the time they were needed 2. They perceive retail packages as being too expensive 3. The combination of core functions they require is too specialized for a single CRM product 4. They want assurance of a unique solution one competition cannot use and vendors cannot reference Because all of the data is centralized on a data warehouse these companies have formalized their processes for integrating and deploying customer data to provide the business with 360 degree view of its customers. An effective enterprise portal that allows business people a common view of the application and data means the applications themselves can be distributed and developed at separate times and no one need know. CRM’s strategic importance they have no choice but to build their own CRM environments to maintain their differentiation and their confidentiality. 2. Using an ASP: This is decision relies on the existence of core infrastructure components, including sufficient hardware and software, networking or Internet capabilities, specific skill sets in both the business and technology areas and a development process robust enough to deliver a requirements driven program. Application service providers (ASPs) are an increasingly popular alternative. ASP is often used as a synonym for outsourcing but ASPs develop, deliver and maintain packaged software application on behalf of their client companies using the Web as the primary deployment mechanism. There are two principal types of ASPs a. Web hosting firms providing customers internet access plus a range of services not to mention a robust technology infrastructure b. Application providers offering customer access to specific products and product packages The reasons companies elect to outsource their CRM implementation to ASPs include: a. Robust technology infrastructure: Companies defining themselves as ASPs must develop mature technology infrastructure that include robust servers wide area networking, operations and database softwares, application development technologies and wireless client support for quick and thorough delivery of multiple software packages. b. Speed of Implementation: Most CRM ASPs usually specialize in one or a handful of product packages thus delivery processes and repeatable across customers, and customization occurs more quickly c. Expertise: ASPs hire and train their staffs to become experts on specific CRM products. Because these staff members apply a CRM product to multiple user environments, they see the product’s strengths and weaknesses and thus posses an intimacy with the product set that your IT department would struggle to replicate. d. Service level agreements: Such contractual agreements establish clear reliability and availability requirements to which the ASP must adhere.

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e. Critical Mass: Not only is the product expertise more solid, but ASPs also have bench strength, meaning the likelihood of CRM specialist availability is higher. This is especially valuable for application maintenance and support no more months spent searching for maintenance programmers freeing your internal technical resources. f. Scalability: With an ASP, you simply let the company know of your new requirement and then work together to schedule the enhancements. Any systems programmer understands the technology ramifications of increased workloads or growing data volumes. g. Economies of Scale: ASP absorbs the high cost of systems administration and maintenance as well as the staff resources and skills necessary to keep the technical environment humming. h. Complexity: ASPs are greater than the sum of their parts. They transcend the collection of UNIX and NT servers, database products, and CRM tools installed in their data centers and become solutions providers. These companies not only deploy and maintain your CRM program, they also provide critical data maintenance, system security, end user support, web access and a variety of other nuts and bolts services that when added up do more than solve you business problem. Companies foregoing the ASP route cite several valid reasons •

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Frequently changing requirements: Many companies who have deployed CRM are continually fine tuning it and have set up schemes for ongoing end user input. A constant stream of new requirements resulting in an updated system might be too much for as ASP who has defined certain standard functionality across its CRM systems and customers based. Complexity and timeliness: Indeed by the time a company can translate its specific needs to an ASP, it might have been able to customize its CRM tool and have it deployed. Integration with existing system: The number and complexity of a company’s systems both legacy system and emerging technologies can render data gathering and provision too complex and cumbersome for some ASPs Hostage taking: After a strategic CRM system is in the hands of an ASP the balance of power shifts. Scary stories proliferate of outsources trying to change contract terms while in possession of mission critical data. Fear: With all the efficiencies and speed that accompany the ASP model, some companies are still nervous about relinquishing their precious customer data into the hands of an outside company no matter how strident the security policy.

CRM tool selection checklist for success • •

Consider the team selecting the product. Be crystal clear about the requirements you would expect an ASP to fulfill and the services you would expect it to provide.

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• • • •

If you are considering an ASP, consider why you are unwilling to invest the money instead into your IT department Choose from the customer’s viewpoint Avoid religion about consultants either yours or the vendors Don’t rely on CRM technologies alone to address business improvements

CRM pre implementation checklist Evaluation question Explanation Considered Have you prepared a CRM Regardless of whether business plan management requires such a document it’s a very good idea to have one that represents CRM baseline Do you know who your By the time you are ready to executive sponsor is and launch development the what she expects CRM executive sponsor should be crystal clear. Moreover her role in defining and validating requirements, managing executive expectations and helping define success metric should be well understood by all stakeholders Have high level business In CRM this activity should requirements identified be separate from the formal development project for two reasons: business requirements will dictate whether the CRM program moves forward and they require involvement from stakeholders who might not be available during implementation Have success metrics been How will you know CRM established program has been a success Has the project been funded No use planning an entire CRM program if only a mere proof of concept has been approved Is there agreement on Sales staff will be using desired customer CRM to manage the sales behaviours pipeline it should establish 79

Does each organization agree on common definition of customers Can you map the desired functionality to data requirements Do you suspect that external data will necessary For customization does the current workstation development environment support the CRM product Have you identified the other applications with which the CRM product must integrate Have the organizational or political barriers to rolling out CRM identified and have they been resolved Have you truly defined your privacy policy

the ideal response to an information mailing The marketing department of an automobile company might consider dealer to be customer and call center consider a driver Defined data requirements with business requirements and proper mapping has to be done Supplement customer data with other external data such as zip code, real estate information etc Type of tool needed for CRM development available in organization or not Understanding the impact of CRM product and how the data moves in and out Identify barriers in CRM implementation and tackle those barriers strategically CRM must adhere to corporate privacy policy

CRM development Teams Core Development Roles Job Role Business Sponsor

Description The business sponsor might serve across a single CRM project or across the entire program. His main role is to establish the vision, articulate overall goals and objectives, set the tone for the project team and server as a tiebreaker for implementation issue CRM steering committee For Cross functional or enterprise CRM initiatives where implementation must be prioritized a committee of decision is there to provide new requirements, prioritize proposed improvements and communicate key corporate initiatives Implementation project This person’s job is to ensure that the requirements defined by manager business sponsor and steering committee dictate the functionality to

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Lead developer Database developer

Front end developer Subject matters expert

be implemented He should manage the technical development and customization of the CRM product as it relates to the requirements. He should lead the necessary data integration, regardless of whether it is operational or analytical CRM. An understanding of key company source systems and how to capture their data is mandatory, requiring a separate team of database administrators and data extraction experts Depending on the chosen CRM product programming is needed to develop or customize the end user interface Critical to CRM success are subject matters experts usually business people from the department slated to use the CRM system and usually have strong ideas of what CRM should and shouldn’t provide and should participate regularly in the development and testing of a CRM product

Optional Development Roles Job Role Director of e-business Director of data warehousing

Description CRM must ensure the integration of web based customer services Existing data, development processes, source system knowledge and metadata can all be used to get a jump start on CRM development. Development teams might consider sharing resources in order to integrate the data warehouse as the de facto CRM analysis platform Chief information officer Socializes CRM as a corporate information resource and facilitate the activity with the IT department to ensure the appropriate systems and data resources Vice president of strategic He should be able to share with the CR team new business areas or planning product offerings the company expects to move toward, acquisition and partnership strategies or existing product and services the company expects to abandon Chief privacy officer A new position in most companies the chief privacy officer should be able to provide on corporate or regulatory policies regarding the use of customer data.

Types of Development in CRM •

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Incremental Development:

Incremental or building block development means the company receives a defined amount of new CRM functionality on a regular basis. This is due not only to the inherent complexity of most CRM projects but also to the cultural issues surrounding its deployment. Incremental CRM releases create a perception among business stakeholders and management of ongoing value. The alternative to incremental is big bang approach of delivering a major new system and accompanying business changes all at once. Requirements driven development: This means developers who are creating or customizing CRM functionality have an understanding of the overarching business requirements driving CRM as well as the necessary functionality. Developing against

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•

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requirements eliminates the notorious phenomenon of “score creep” and ensures that users get what they are expecting. Continuous user involvement: Many CRM teams fall into the trap of involving business users at the beginning and end of CRM but rarely in the middle during its development where its often critical. This means end users evaluating proofs of concept, validating data and business rules weighing in on the contents to CRM training, and reviewing new screens or functionality prior to CRM deployment. It also means establishing regular communications between development, the business stakeholders and the CRM business sponsor. Implementation process rigor: Even with other CRM best practices in place, such as comprehensive requirements and an enthusiastic business sponsor, CRM development must be planned and executed around a structured development process. This is to ensure that the PMO and project managers can anticipate and accurately scope various development activities. A sound development roadmap also ensures that programmers focus less on implementation process and more on the actual delivery of valuable CRM functionality.

CRM implementation Roadmap Step 1 Business Planning • CRM strategy • CRM business plan • Process planning and identification • ROI Step-2 Architecture/Design • Project prioritization • Staff planning • Pre-implementation checklist Step-3 Technology selection • Vendor evaluation • Technology alignment • Product installation Step-4 Development • Customization/development • Process integration • Prototyping • Database design Step-5 82

Delivery • Deployment • Documentation • User training • Internal PR Step-6 Measurement • Evaluate metrics CRM Implementation Checklist----For Failure •

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Failure to define a CRM strategy: Simply defining what CRM means to your company is difficult enough without gathering consensus on a corporate wide strategy. Companies routinely misinterpret business requirements and thus underestimate the complexity of CRM. Failing to management staff expectations: Many firms apply rigor to planning and development but forget about deploying the CRM system to the business. The CRM rollout in which an IT liaison sends an email to sales staff announcing training for the new sales force automation package is doomed before its even delivered. Failure to define success: CRM business sponsors who understand the differences between CRM various applications but don’t differentiate between cross selling and improved profitability. Hasty ASP decisions: Companies have not sorted out the advantages and disadvantages of the ASP model. Small to mid size firms assumes ASPs are too costly and despite potential cost savings. Understand the pros and cons of the ASP model and make a decision based on your business and functional requirements. Failure to improve business: The proverbial mistake of paving the growth applies here: CRM should not simply overlay archaic corporate policies. It should instead formalize and automate nimble customer focused business processes. Processes should be defined from the customer’s perspective and not the technology. Lack of data integration: Effective customer focused decision making means understanding each customer across her various touchpoints and beyond your immediate knowledge of her age, income, preferred channel or sales territory. The difficult truth is that customer data exists in multiple systems on a variety of technology platforms across your company. Finding, gathering and consolidating this data is not easy but its critical. Failure to continue socializing CRM to the enterprise at large : Companies who have delivered nothing less that revolutionary customer facing improvements via CRM often rest on their laurels. CRM is an ongoing process, and success breeds success. Consider establishing an internal PR job function to communicate with executing and decision makers who might determine ongoing funding as well as to the various lines of business who might leverage the functionality and data to further their own customer focuses.

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CRM Roadblocks CRM roadblocks are the obstacles occur during the business planning or requirements gathering which do not allow the CRM to set right thing at right time Four Ps’ of CRM roadblocks 1. Process: Many companies make the mistake of purchasing a CRM tool that supports repeatable processes only to discover that their business processes are not defined well enough to be repeatable. Some companies are slow or unwilling to modify their business processes to support better customer relationship 2. Perception: After CRM has been deployed business people should be able to accomplish the same work in less time or be able to perform new tasks that ultimately make their jobs easier and at the same time enhance customer relationships. And customer perception, after all a customer perception of the company is the basis for whether she will return to your web site or store. CRM can either deliver or destroy a customer’s high opinion of your company and its offerings. 3. Privacy: Consumers are more likely to share their personal information with your company if they receive something valuable in return. Incorporate this into your CRM planning to ensue that customers are sufficiently motivated to continue interacting with you at every touchpoint. Understand permission marketing and the trade offs between asking customers to opt in versus opt out. Customer can log on to a secure website and actually change their own profiles benefiting both parties. Appoint a chief privacy officer to enforce a corporate privacy policy and communicate then both internally and externally. 4. Politics: It involves the development of a data warehouse or other CRM related technology solution and labeling it CRM without defining a clear CRM strategy, planned process improvements, organizational changes or business participation. Declaring an activity or technology project to be CRM does not make it so and risk tampering the high impact business message of any bonafide CRM project awaiting approval. CRM in a vaccum simply does not work long term and can actually delay or destroy an entire CRM program.

Other CRM saboteurs 1. 2. 3. 4.

Lack of CRM integration Poor organizational planning Demanding customers Poor customer service

Future of CRM 1. The customer as Subject Matters Expert(SME) a. Companies asking customers how to plan their CRM strategies b. Rendering customers as subject matters expert c. Leveraging customers to improve business process and recording the feedback of customers who have taken the time to participate d. Customers helps in prioritizing the tasks 2. The Rise of intermediaries a. Intermediaries act to simplify the purchase process by acting as one stop information resources. b. Companies try to keep pace with their customers purchases and feedback intermediaries triangulate a two way interaction between company and customers

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c. Intermediaries help identify purchases and feedback as part of customer’s overall profile. 3. Digital and Broadband Revolutionize Advertising a. Enable advertisers to send personalized commercials to households that fit a certain desired customer profile b. Allow companies to target market in real time c. Supports mass marketing with customized manner 4. The threat and promise of customer communities a. Communicate improvements b. Virtual meeting place of buyer and sellers c. Communicate experiences d. Streamlined supply chains 5. CRM goes global a. Country specific strategy b. Direct mail communication c. Expensive d. Multi language support e. Serve a growing base of international customers 6. The Coming CRM backlash a. Improve customer experience b. Increasing expectations for CRM c. Increases customer satisfaction d. Improved customer perceptions

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