Introduction to CRM Anisa Zahra Putriarum | Teknik Informatika | Politeknik Negeri Jakarta introduction to crm

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Introduction to Customer
Relationship Management
(CRM)
Semester Ganjil 2013/2014

Learning Objectives

 Understand the basic concept of CRM
 Identify the four major perspectives on CRM
 Define several common misunderstandings
about CRM
 Understand five generic models of CRM
 Overview of history and development of CRM

Sales Cycle

(1) Identify
Prospect

(2) Estimate
Sales Potential

(5) Initiate and Maintain
Customer Relationship

(4) Forecasting
Sales

(3) Manage Leads

CRM Stands for?
Customer Relationship Management
OR

Customer Relationship Marketing
OR

Continuous Relationship Marketing

Selected definitions of CRM [1]
 CRM is an information industry term for
methodologies, software, and usually
Internet capabilities that help an enterprise
manage customer relationships in an
organized way
 CRM is the process of managing all aspects of
interaction a company has with its

customers, including prospecting, sales, and
service
 CRM applications attempt to provide insight into and
improve the company/customer relationship by
combining all these views of customer interaction into
one picture

Selected definitions of CRM [2]
 CRM is an integrated approach to
identifying, acquiring, and retaining
customers
 By enabling organizations to manage and
coordinate customer interactions across
multiple channels, departments, lines of
business, and geographies, CRM helps
organizations maximize the value of every
customer interaction and drive superior
corporate performance
 

Selected definitions of CRM [3]
 CRM is an integrated information system that
is used to plan, schedule and control the presales and post-sales activities in an
organization
 CRM embraces all aspects of dealing with prospects
and customers, including the call center, sales force,
marketing, technical support and field service
 The primary goal of CRM is to improve long-term
growth and profitability through a better
understanding of customer behaviour
 CRM aims to provide more effective feedback and
improved integration to better gauge the return on
investment (ROI) in these areas

Selected definitions of CRM [4]
 CRM is a business strategy that
maximizes profitability, revenue and
customer satisfaction by organizing
around customer segments, fostering
behaviour that satisfies customers,

and implementing customer-centric
processes

Core Definition of CRM
 CRM is the core business strategy that
integrates internal processes and
functions, and external networks, to
create and deliver value to targeted
customers at a profit
 It is grounded on high quality customerrelated data and enabled by information
technology

CRM is Founded on Four Tenets
1. Customers should be managed as important
assets
2. Not all customers are equally desirable
3. Customers vary in their needs, preferences, and
buying behavior
4. By better understanding their customers,
companies can tailor their offerings to maximize

their overall value

The CRM Advantages

Better
Customer
Knowledge

Increases
Market
Share

Creates Up
and Cross-Selling
Opportunities

Quicker Cash Flow

Increased
Product

Acceptance

Why CRM Systems are Being Used ?
 Identifying prospects
 Acquiring customers
 Developing customers
 Cross-selling and up-selling
 Servicing
 Retaining
 Increasing loyalty
 Winning back defectors

CRM’s Benefits for Retail Banks (Example)
 Increase in average products sold per customer
over one year from 4.6 to 6.2
 3-5 percent decrease in administrative costs
 200 percent return on technology investment
through cost reduction over one year
 96 percent reduction in average time for a CCC
agent to refer a customer to a branch loan office

 83 percent decrease in average customer info
retrieval time
 15 percent increase in product revenue in one year

Lowell Alcorn and Anton Wiryawan, Mortgage Banking (Feb 2004): 74-78

A Customer Focus Can Aid Retention
 Annual Defection Rates






Newspaper subscriptions 66 percent
Residential tree and lawn care
32 percent
U.S. long distance telephone
30 percent
Clothing catalogues 25 percent

Internet service providers 22 percent

Griffen and Lowenstein 2001

Customer Retention and Profits
 Increase retention 5 percent and improve
profitability in net present value from 20-85
percent
 It costs five to ten times more to obtain a
new customer than it does to keep an
existing one

Which Companies Benefit Most from CRM?
 Companies serving large numbers of
customers through complex and frequent
interactions:







Communications companies
Retail banks
Insurance companies
Healthcare organizations
Utilities

 Companies with a steep skew
 Companies in “lost for good” markets

Which Companies Benefit the Least from CRM Today?

 Companies that engage in minimal interactions
with each customer
 Auto dealers
 Government agencies
 Companies with simple transaction
 Movie theater
 Retail stores

Types of CRM
Type of CRM
Strategic

Operational
Analytical

Dominant characteristic
a core customer-centric business strategy
that aims at winning and keeping profitable
customers
focuses on the automation of customer-facing
processes such as selling, marketing and
customer service
focuses on the intelligent mining of customerrelated data for strategic or tactical purposes

applies technology across organizational
Collaborative boundaries with a view to optimizing
company, partner and customer value

Strategic CRM
 Focus upon the development of a
customer-centric business culture that is
dedicated to winning and keeping the
customers
 Customer-centricity competes with other
business logics
 E.g. Philip Kotler identifies three other major
business orientations: product, production and
selling

Customer Centricity & Other Business Logics [1]
1. Product-oriented businesses believe that
customers choose products with the best
quality, performance, design or features
2. Production-oriented businesses believe that
customers choose low-price products
3. Sales-oriented businesses make the
assumption that if they invest enough in
advertising, selling, public relations (PR)
and sales promotion, customers will be
persuaded to buy

Customer Centricity & Other Business Logics [2]

4. A customer or market-oriented company
shares a set of beliefs about putting
the customer first




It collects, disseminates and uses customer and
competitive information to develop better value
propositions for customers
A customer-centric firm is a learning firm that
constantly adapts to customer requirements and
competitive conditions

Operational CRM
Marketing automation
Market segmentation
Campaign management
Event-based (trigger) marketing
Sales force automation
Account management
Lead management
Opportunity management
Pipeline management
Contact management
Quotation and proposal generation
Product configuration
Service automation
Case (incident or issue) management
Inbound communications management
Queuing and routing
Service level management

Marketing Automation
 Applies technology to marketing processes
 Market segmentation
 Campaign management
• Allow marketers to use customer-related data in order to
develop, execute and evaluate targeted communications and
offers

 Event-based (trigger) marketing
• Describe messaging and offer presentation to customers at
particular points in time
• Event-based campaigns can be initiated by customer
behaviours or contextual conditions
• Ex. A call to contact center is an example of a customer

Sales-force Automation
 The original form of operational CRM
 Applies technology to the management of a company’s
selling activities
 Improve and standardize the selling process
 Consist of:
 Account management
 Lead management: enable users to qualify leads and assign
them to the appropriate salesperson
 Opportunity management
 Pipeline management
 Contact management: manage their communications
programme with customers
 Quotation and proposal generation: allow the salesperson to
automate the production of prices and proposals for customers
 Product configuration: enable salespeople or the customer
themselves, automatically to design and price customized
products, services or solutions to problems

Service Automation
 Allow companies to manage their service
operations, whether deliverd through call
centre, contact centre, web or face-to-face
 Consists of:
 Case (incident or issue) management
 Inbound communications management
 Queuing and routing
 Service level management

Sources of Customer-related Data for Analytical CRM
 Internal sources
● Sales data (purchase history), financial data (payment
history, credit score), marketing data (campaign response,
loyalty scheme data) and service data.
 External sources
● Geo-demographic and life-style data from business
intelligence organisations, for example.

Beneficiaries of Analytical CRM
 Customer
● Analytical CRM can deliver timely,
customized, solutions to the customer’s
problems, thereby enhancing customer
satisfaction.
 Company
● Analytical CRM offers the prospect of more
powerful cross-selling and up-selling
programs, and more effective customer
retention and customer acquisition programs.

Misunderstandings about CRM
1.
2.
3.
4.
5.

CRM is database marketing
CRM is a marketing process
CRM is an IT issue
CRM is about loyalty schemes
CRM can be implemented by any
company

CRM Constituencies
1.
2.
3.
4.
5.
6.

Companies implementing CRM
Customers and partners of those companies
Vendors of CRM software
CRM application service providers (ASPs)
Vendors of CRM hardware and infrastructure
Management consultants

CRM Challenges Vary Across Context
1.
2.
3.
4.
5.

Banks
Auto manufacturers
High tech companies
Consumer goods manufacturers
Not-for-profits

The IDIC Model of CRM
 Identify who your customers are and build a
deep understanding of them
 Differentiate your customers to identify which
customers have most value now and which
offer most for the future.
 Interact with customers to ensure that you
understand customer expectations and their
relationships with other suppliers or brands
 Customize the offer and communications to
ensure that the expectations of customers
are met.

The QCi Model of CRM

The CRM Value Chain

Payne’s 5-process Model of CRM

Gartner’s Competency Model of
CRM

References
 Francis Buttle, Customer Relationship
Management: Concepts and Technologies,
2e, Elsevier Ltd., 2009
 Baran, Galka and Strunk, Principles of
Customer Relationship Management,
South-Western, 2008