Currys Pyramid Model

REPORT ON

INCREASE REVENUE EARNING CUSTOMER BASE

CURRYS PYRAMID MODEL In order to increase revenue the main objective is customers. first customers needs , their requirement theirs satisfaction is necessary for any product in order to enhance it sales. Therefore successfully identifying most valuable customers acquire them, keep them and increase their purchases gives more significant value for a product. Therefore customer pyramid provides a company with the mechanism for segmenting its customers its customer base and in doing so, visualizing analyzing customer behavior loyalty and value within each of those customer segments JAY & ADAM CURRY (2000) revitalized the concept of customer pyramid. Customer relationship management (CRM) seems to be the latest hot business topic but it is much more than a technology fad. In fact the CRM debate has been going on for more than three decades .Currys pyramid provides a guide to the organization via the implementation of CRM. It forces the organization to segment customers in terms of revenue generation ,which indicates how important a customer is .customers are treated differently in each segment of the pyramid. Tata Indicom is using CRM from 10 years down the line; it has been much helpful for Tata in maintaining and controlling customer relationship. CRM provides an insight into cross selling and up selling opportunities; CRM is an online process in Tata Indicom, where any authorized personnel can update the information about the customer requests, changes, up gradation of customer segment and customer feedback.

The critical success factors of CRM: 1. Tata indicom follows customer centric strategies, including the use of customer satisfaction data, tracking numbers of customers gained or lost and installation of “voice of the customer” programs. 2. Intensive training and coaching of front-line managers and staff. Tata indicom conducts effective training programme to its employees about CRM and management. 3. The ability to manage change. CRM analyses the information, if necessary redesigns information requirements. 4. Establishing measurable goals, to perceive the customers as they are provided with Tata Indicom products services and experiences.

The Short History Of Customer Marketing: Customer marketing was originated in 1989 by American direct marketing consultant based in Amsterdam. For several years It had been confronted with a lot of confusion – and negative attitudes – about direct marketing among European CEOs. In 1989 there was a seminar on direct marketing to a high-level audience, which was decided to resolve the issue completely. Then it was declared that “direct marketing” was actually “customer marketing,” the process of finding, making, keeping, and developing customers. In 1997 the European Commission, recognizing the innovative character of customer marketing, funded project ACUMAP – A Customer Marketing Pilot, designed to validate the method and support the development of software, tools, and training materials that could help European companies maintain a competitive advantage. The ACUMAP project was successfully completed in June 1998, which resulted in a validated method to help companies implement and profit from what is now known as “customer relationship management.” Since early in 2000, Customer Marketing International BV, based in Amsterdam, has brought to market the customer marketing method and tools. The Definition of Customer Marketing

Customer marketing is a business method that uses process control techniques to measure, manage, and improve customer performance and customer focus. The customer performance factors are: o o o

Customer profitability; Customer behavior; and Customer satisfaction.

The internal customer focus factors are: o Organization; o Communications; and o Information. The customer marketing method is represented graphically in a pyramid.

The Customer Performance Factors

Customer Value Operational profit is the result of deducting the losses from unprofitable customers from the profit generated from profitable customers. It’s as simple as that. Hence the need to maximize customer profitability, as measured in profit per customer and customer lifetime value. Customer Behavior While cost factors play an important role in the profitability of a customer, customer value is, to a large extent, determined by customer behavior. Customer behavior is usually measured in terms of revenue – either monetary or volume of product or services ordered over a period of time. Positive customer behavior means, in the first place, that a customer is a customer – he buys from you. A second customer behavior parameter is customer lifetime, or the average length of time as measured in months or years that the average customer does business with you. A third and important customer behavior factor is share of customer: the extent to which a customer meets his needs for the kinds of products or services by doing business with you. Customer Satisfaction Happy and satisfied customers behave in a positive manner. They will buy a lot from you and will give you a large share of their business. Customer satisfaction is derived largely from the quality and reliability of your products and services. You make good on your explicit and implied promises.

But customers who are just “satisfied” are likely to walk away for a slightly more attractive proposition from your competitor. The major goal of a customer satisfaction program should be to achieve “preferred supplier” status with as many customers as possible. The Customer Focus Factors

Customer performance – customer value, customer behavior, and customer satisfaction – is something that happens outside the company. But customer performance is predominantly determined by customer focus factors inside the company and has a major impact on customer performance. There are three primary and six secondary customer focus factors: Organization 1. Managers are committed to customer focus, set an example for themselves, and budget time and money for customer process improvement. 2. Employees possess the necessary customer care skills and experience, have a customer care attitude, and work in teams with others who have customer contacts. Communications 3. Contact logistics: Customer communications are well planned, on time, and have no sloppiness in execution. 4. The most appropriate methods, media and messages are applied to each customer (segment); communications are interactive and stress customer benefits rather than product features. Information 5. Customer data is relevant, complete and up to date. 6. Customer information systems are effective, flexible, and user-friendly. There is clearly a direct correlation between customer focus and customer performance, Which has improved Tata indicom customer focus and customer performance. Putting customer performance and customer focus together brings to a CRM model. The model represents the idea that when the internal customer focus is strong, where customers will be very satisfied. When customers are very satisfied, they give a large part of their business, often without any major marketing and sales effort or squeezing every cent off the price. This positive customer behavior has lead to higher customer value – and therefore more operational profit for Tata Indicom.

TATA Process Control Techniques: Managing customer performance and customer focus is not really possible without measuring progress and results. Marketing, sales, and service must be subjected to the same process control techniques that are often used for production, logistics, and administration: Customer marketing is carried out on a continuing basis applying the four phases of process control: Registration o Customer performance registration: You acquire or integrate from internal sources data on customer profitability, behavior, and satisfaction. o Customer focus registration: You undertake a customer focus audit or self-assessment of your customer information, communications, and organization. Analysis o Customer performance analysis: You analyze the profitability, behavior, and satisfaction of your customers and prospects to identify problems and opportunities. o Customer focus analysis: You analyze the current status of your customer information, communications, and organization and identify priorities for improvement. Planning o Customer performance planning: You set top-down/bottom-up profitability, revenue and satisfaction targets for each customer (and prospect) that, when realized, will meet corporate goals for profitability, revenues, and satisfaction. o Customer focus planning: You make plans to make measurable improvements in your customer information, communications and organization. Realization o Customer performance realization: You execute customer performance plans. o Customer focus realization: You execute customer focus plans.

TATA INDICOM Customer Pyramid Tata tele services segment its customers according to the customer’s Average Revenue per User (ARPU) and their Age on network (AON) Customer Segmentation – Matrix

1. GOLD Segment Characteristics Typically, the GOLD segment consists of the most loyal customers. These customers aren’t overly concerned with product price. These customers are concerned with value and quality of the merchandise they purchase. They also are the heaviest users of the products. These customers are the most likely to invest in and try new products. GOLD Segment Most businesses keep their platinum customers by offering incentive programs. Store specific credit cards Discounts based on the amount of spending frequent shopper programs Special customer services

2. SILVER Segment Characteristics The silver segment differs from the gold segment because most silver segment customers are more price sensitive. Silver segment customers don’t purchase as much as gold segment customers. Silver segment customers aren’t as loyal to one retailer and will go to competitors if the price is right.

Silver Segment Retailers that would like to turn silver segment customers into gold segment customer have a couple of different options. Frequent shopper programs, Return customer discounts, Price matching.

3. BLUE Segment Characteristics Blue segment customers most likely are not loyal to any one retail business. These customers are very price conscious and will shop many places to get the best price. These customers are not likely to spend much at any one store. Blue Segment Turning a blue segment customer into a gold segment customer is very difficult. Some ways that this might be accomplished include the following: Price matching, Sales on specific merchandise, Advertising, Comparable merchandise at discount prices.

4. New Segment Characteristics These customers are the most likely to actually cost a business money by being customers. New segment customers demand a lot of attention for very little spending. In this segment building loyalty is very difficult. New Segment Tighter return policies Associates who have specifically been trained to deal with these “problem” customers charging for services that most lead segment customers are abusing.

CURRYS PYRAMID MODEL (TATA INDICOM CUSTOMER SEGMENT)

GOLD SILVER BLUE NEW INACTIVE PROSPECTS

SUSPECTS

GOLD

1%

SILVER

4%

BLUE

15%

NEW

80%

THESE 20% OF CUSTOMERS GIVES 80% OF PROFIT

THE REST 20% OF PROFIT IS GIVEN BY 80% OF CUSTOMERS

According to Tata’s customer pyramid it is observed that it follows 80/20% rule as per curry’s model. 80% profit comes from 20% of customers where gold, silver, and blue customers come under 20%. Remaining 80% customers contributes 20%profit to the company, where new customers come under this category. Idea behind these rule is not all customers are profitable .Therefore Tata indicom is more concerned with gold and silver customers. Hence these models available to support managers and business analysts in customer marketing and relationship management. Hence the success of organization in targeting, acquiring and retaining customers is obviously influenced with CRM leads to enhancement of Tata revenue. Therefore TATA is more successful as it is more customer centered.

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