CHAPTER 9. CUSTOMER RELATIONSHIP MANAGEMENT
Organizations are emphasizing a customer-centric approach to their business
practices because they know that sustainable value is found in long-term customer
relationships that extend beyond today’s business transactions. This customer-centric
approach is known in businesses as customer relationship management (CRM)
• Internet and www makes suppliers easily accessible to customers. It’s just a mouse click
• Lack of opportunity to make a first good impression on customers due to lack to personal
CRM refers to personal marketing that utilizes information about customers to create offers that
customers are more likely to accept. It is designed to achieve customer intimacy and is enabled
by Information technology.
• Organizational strategy that is customer-focused and customer-driven.
• Assessing customer’s requirements and then providing high-quality, responsive service.
• Way of thinking and acting in a customer-centric fashion.
• Builds sustainable long-term customer relationships that create value for the company and
• Helps acquire new customers, retain existing profitable customers, and grow the
relationship with existing customers.
• Division of customers: prospective customers -> customers -> repeat customer-> low-
value and high-value repeat customers.
• Customer churn: process of losing a certain percentage of customers.
Main objective: maximize the number of high-value repeat customers while
minimizing customer churn by treating customers differently, as they have different
needs and different values.
TWO BASIC ELEMENTS OF SUCCESSFUL CRM POLICIES
IDENTIFY MANY TYPES OF CUSTOMER TOUCH POINTS
Organizations must recognize the numerous and diverse interactions that they have with their
customers. These various types of interactions are referred to as customer touch points.
Traditional CTP. Eg. Telephone contact, direct mailings, and actual physical interactions with
Modern CTP. Eg. E-mail, websites, and communications via smart phones.
Customer information are diversely located across functional areas of the business
Difficulty in sharing data across various functional areas. Interconnected systems built around a data warehouse makes customer-related data available to
every unit of the business. This complete data set on each customer is called a 360-degree
view of that customer.
Data consolidation + 360-degree view = collaborative CRM
Collaborative CRM systems provide effective and efficient interactive communication with the
customer throughout the entire organizations by integrating communication s between
organization and its customers in all aspects of marketing, sales, and customer support
processes while enabling customer feedback.
TWO MAJOR COMPONENTS OF CRM
It supports the front-office business processes, which involves direct interaction with customers,
in the form of sales, marketing and service. Two major components of operational CRM:
Customer-Facing Applications: those applications where an organization’s sales, field
service and customer interaction centre representatives actually interact with the
customers. Applications include-
I. Customer service and support: systems that automate service requests, complaints,
product returns and requests for information.
Customer Interaction Centres (CIC) - where organizational representatives use
multiple communication channels like web, telephone, fax, and face-to-face interactions to
support communication preferences of customers.
Outbound telesales- using CIC to create a call list for the sales team, whose members
contact sales prospects. This is an interactive discussion between the customer and the
Inbound telesales-customers can communicate directly with CIC if they wish to initiate a
sales order, inquire about the product or services before placing an order, or obtain
information about a transaction that they have already made.
CIC’s Information help desk-assists customers with their questions concerning products
or services and also processes customer complaints.-> follow-up activities such as quality-
control checks, delivery of replacement parts or products, service calls, generation of
credit memos, and product returns.
Modern technology+ CIC= email, web interaction.
Eg. Epicor’s software allowing emails and other information available to customer
Live chat allows customer to connect to a company representative via instant messaging.
II. Sales Force Automation (SFA): CRM system that automatically records all the aspects
in a sales transaction process. Includes:
- Contact management system- tracks all contact that has been made with a customer,
purpose of contact and follow up .Eliminates duplicated contacts and redundancy
-Sales lead tracking system-lists potential customers or customers who have
purchased related products. -Sales forecasting system- mathematical technique for estimating future sales.
-Product knowledge system- comprehensive source of information regarding products
Built in product-building features-called configurators: enable customers to model the
product to meet their specific needs.
Eg.NikeID custom shoes.
III. Marketing :
enables marketers to identify and target their best customers
manage marketing campaigns and generate quality leads for the sales teams
provide opportunities to sift through volumes of customer data –data mining
develop purchasing profiles that will help in
• Cross-selling: practice of marketing additional related products to customers
based on previous purchase. Eg. Amazon.
• Up-selling: sales strategy in which the business person will give customers the
opportunity to purchase higher-value related products or services as opposed to or