CRM Study Material .pdf

REGIONAL COLLEGE OF MANAGEMENT(A),
BHUBANESWAR

Customer Relationship
Management
Study Material
Dr Ajitabh Dash

INTRODUCTION
Customer relationship management (CRM) is a broadly recognized, widely-implemented
strategy for managing and nurturing a company‟s interactions with customers, clients and sales
prospects. It involves using technology to organize, automate, and synchronize business
processes, principally sales activities, but also those for marketing, customer service, and
technical support. The overall goals are to find, attract, and win new clients, nurture and retain
those the company already has, attract former clients back into the fold, and reduce the costs of
marketing and client service. Customer relationship management denotes a company-wide
business strategy embracing all client-facing departments and even beyond. When an
implementation is effective, people, processes, and technology work in synergy to increase
profitability, and reduce operational costs.

A company will store information that is related to their customers, and they will spend time
analyzing it so that it can be used for this purpose. There are a number of reasons why CRM has
become so important in the last 10 years. The competition in the global market has become
highly competitive, and it has become easier for customers to switch companies if they are not
happy with the service they receive. One of the primary goals of CRM is to maintain clients.
When it is used effectively, a company will be able to build a relationship with their customers
that can last a lifetime. Customer relationship management tools will generally come in the form
of software. Each software program may vary in the way it approaches CRM. It is important to
realize that CRM is more than just a technology.
Customer relationship management could be better defined as being a methodology, an
approach that a company will use to achieve their goals. It should be directly connected to the
philosophy of the company. It must guide all of its policies, and it must be an important part of
customer service and marketing. If this is not done, the CRM system will become a failure.

There are a number of things the ideal CRM system should have. It should allow the company to
find the factors that interest their customers the most. A company must realize that it is
impossible for them to succeed if they do not cater to the desires and needs of their customers.
Customer relationship management is a powerful system that will allow them to do this. It is also
important for the CRM system to foster a philosophy that is oriented towards the customers.
While this may sound like common sense, there are a sizeable number of companies that have
failed to do it, and their businesses suffered as a result. With CRM, the customer is always right,
and they are the most important factor in the success of the company. It is also important for the
company to use measures that are dependent on their customers. This will greatly tip the odds of
success in their favor. While CRM should not be viewed as a technology, it is important to
realize that there are end to end processes that must be created so that customers can be properly
served. In many cases, these processes will use computers and software. Customer support is
directly connected to CRM. If a company fails to provide quality customer support, they have
also failed with their CRM system. When a customer makes complaints, they must be handled
quickly and efficiently. The company should also seek to make sure those mistakes are not
repeated. When sales are made, they should be tracked so that the company can analyze them
from various aspects. It is also important to understand the architecture of Customer relationship
management. The architecture of CRM can be broken down into three categories, and these are
collaborative, operational, and analytical. The collaborative aspect of CRM deals with
communication between companies and their clients.
ORIGIN OF CRM
CRM originated in early 1970s when the business units had a manifestation that it would be
advisable to become „customer emphatic‟ rather that „product emphatic‟. Birth of CRM was
because of this heedful perceptiveness.
The famous writer and management consultant Peter Drucker wrote; „The true business of every
company is to make and keep customers‟. Traditionally every transaction was on paper and
dependent on goodwill which created hindrance in clutching customers. People used to work hard
in entertaining customers by presenting new products with astonishing services; they were ready
to work overtime for grasping more and more customers for increasing business. This too resulted

in customer satisfaction and loyalty up to some extent, but at the end of the day there was no such
bonding or relation between the two to carry on with future business smoothly.
Previously business was quite easy as it was mere a one-to-one dealing without any specific
process. But with time, due to incoming complexities in communication, it found itself in
troubled waters. Emerging of new strategies and technologies in global marketplace and a
mammoth degree of competition in business, the approach needed to be changed to proactive
rather than reactive. Origination of CRM turned out to be a piece of cake for all suppliers and
customers due to its advantages. Customer relationship management came as a process that
dealt with relationships with customers surpassing the whole business.
Originally customer relationship management was based on three major principles; shielding the
current customers, fostering new customers and enhancing asset value of all the customers. With
the advent of CRM which was integrated with high end software and technology, business
perspectives were totally changed. A CRM system eventually emerged as consisting of
company-full of information which is depicted sophistically to increase business profit and
meliorate customer satisfaction and loyalty, on the same hand reduces business cost and
investment.
The outgrowth in origin of CRM as a strategic approach is a result of some of the following
important perspectives:
1. The belief that customers are the real assets and not just the people in the audience.
2. The maturation of one-to-one transaction advent.
3. Extensive use of software and technologies to maintain useful information and no manual
labor.
4. The realization of the benefits of utilizing information proactively and not reactively.
5. The change of business view to relationship approach rather than transactional approach.
6. The approach of concentrating more on customer values rather than concentrating on how
the product is delivered to the customer.
7. The approach of focusing on customer satisfaction and loyalty rather than focusing self
satisfaction and profit.

8. The acceptance of the fact that using high end technologies and software the cost can
radically be decreased without compromising on quality and service of products.
9. The increasing tendency to retain existing customers and trying to get more and more
business out of them.
10. The realization that the traditional trends of marketing and selling are increasingly fading
out in the current economic scenario.
These additive approaches helped a lot in building up consequently the modern CRM. Today we
have well defined and sophisticated CRM systems into being which are always in process of
improvement.
FEATURE OF CRM
Customer Relationship Management is a strategy which is customized by an organization to
manage and administrate its customers and vendors in an efficient manner for achieving
excellence in business. It is primarily entangled with following features:
1. Customers Needs- An organization can never assume what actually a customer needs.
Hence it is extremely important to interview a customer about all the likes and dislikes so
that the actual needs can be ascertained and prioritized. Without modulating the actual
needs it is arduous to serve the customer effectively and maintain a long-term deal.
2. Customers Response- Customer response is the reaction by the organization to the
queries and activities of the customer. Dealing with these queries intelligently is very
important as small misunderstandings could convey unalike perceptions. Success totally
depends on the understanding and interpreting these queries and then working out to
provide the best solution. During this situation if the supplier wins to satisfy the customer
by properly answering to his queries, he succeeds in explicating a professional and
emotional relationship with him.
3. Customer Satisfaction- Customer satisfaction is the measure of how the needs and
responses are collaborated and delivered to excel customer expectation. In today‟s
competitive business marketplace, customer satisfaction is an important performance
exponent and basic differentiator of business strategies. Hence, the more is customer
satisfaction; more is the business and the bonding with customer.

4. Customer Loyalty- Customer loyalty is the tendency of the customer to remain in
business with a particular supplier and buy the products regularly. This is usually seen
when a customer is very much satisfied by the supplier and re-visits the organization for
business deals, or when he is tended towards re-buying a particular product or brand over
times by that supplier. To continue the customer loyalty the most important aspect an
organization should focus on is customer satisfaction. Hence, customer loyalty is an
influencing aspect of CRM and is always crucial for business success.
5. Customer Retention- Customer retention is a strategic process to keep or retain the
existing customers and not letting them to diverge or defect to other suppliers or
organization for business. Usually a loyal customer is tended towards sticking to a
particular brand or product as far as his basic needs continue to be properly fulfilled. He
does not opt for taking a risk in going for a new product. More is the possibility to retain
customers the more is the probability of net growth of business.
6. Customer Complaints- Always there exists a challenge for suppliers to deal with
complaints raised by customers. Normally raising a complaint indicates the act of
dissatisfaction of the customer. There can be several reasons for a customer to launch a
complaint. A genuine reason can also exist due to which the customer is dissatisfied but
sometimes complaints are launched due to some sort of misunderstanding in analyzing
and interpreting the conditions of the deal provided by the supplier regarding any product
or service. Handling these complaints to ultimate satisfaction of the customer is
substantial for any organization and hence it is essential for them to have predefined set
of process in CRM to deal with these complaints and efficiently resolve it in no time.
7. Customer Service- In an organization Customer Service is the process of delivering
information and services regarding all the products and brands. Customer satisfaction
depends on quality of service provided to him by the supplier. The organization has not
only to elaborate and clarify the details of the services to be provided to the customer but
also to abide with the conditions as well. If the quality and trend of service go beyond
customer‟s expectation, the organization is supposed to have a good business with
customers.

Let it be a newly brought up enterprise or a well established organization the above aspects prove
to be of prime importance in dealing with a genuine customer through a well organized CRM
system.
IMPORTANCE OF CRM:
Customer Relationship management is the strongest and the most efficient approach in
maintaining and creating relationships with customers. Customer relationship management is not
only pure business but also ideate strong personal bonding within people. Development of this
type of bonding drives the business to new levels of success.
Once this personal and emotional linkage is built, it is very easy for any organization to identify
the actual needs of customer and help them to serve them in a better way. It is a belief that more
the sophisticated strategies involved in implementing the customer relationship management, the
more strong and fruitful is the business. Most of the organizations have dedicated world class
tools for maintaining CRM systems into their workplace. Some of the efficient tools used in
most of the renowned organization are BatchBook, Salesforce, Buzzstream, Sugar CRM etc.
Looking at some broader perspectives given as below we can easily determine why a CRM
System is always important for an organization.
1. A CRM system consists of a historical view and analysis of all the acquired or to be
acquired customers. This helps in reduced searching and correlating customers and to
foresee customer needs effectively and increase business.
2. CRM contains each and every bit of details of a customer, hence it is very easy for track a
customer accordingly and can be used to determine which customer can be profitable and
which not.
3. In CRM system, customers are grouped according to different aspects according to the
type of business they do or according to physical location and are allocated to different
customer managers often called as account managers. This helps in focusing and
concentrating on each and every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also useful in
acquiring new customers. The process first starts with identifying a customer and

maintaining all the corresponding details into the CRM system which is also called an
„Opportunity of Business‟. The Sales and Field representatives then try getting business
out of these customers by sophistically following up with them and converting them into
a winning deal. All this is very easily and efficiently done by an integrated CRM system.
5. The strongest aspect of Customer Relationship Management is that it is very costeffective. The advantage of decently implemented CRM system is that there is very less
need of paper and manual work which requires lesser staff to manage and lesser resources
to deal with. The technologies used in implementing a CRM system are also very cheap
and smooth as compared to the traditional way of business.
6. All the details in CRM system is kept centralized which is available anytime on
fingertips. This reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they actually need
increases the customer satisfaction. This increases the chance of getting more business
which ultimately enhances turnover and profit.
8. If the customer is satisfied they will always be loyal to you and will remain in business
forever resulting in increasing customer base and ultimately enhancing net growth of
business.
In today‟s commercial world, practice of dealing with existing customers and thriving business
by getting more customers into loop is predominant and is mere a dilemma. Installing a CRM
system can definitely improve the situation and help in challenging the new ways of marketing
and business in an efficient manner. Hence in the era of business every organization should be
recommended to have a full-fledged CRM system to cope up with all the business needs.
Objectives of CRM

CRM, the technology, along with human resources of the company, enables the company to
analyze the behavior of customers and their value. The main areas of focus are as the name
suggests: customer ,relationship , and the management of relationship and the main objectives to
implement CRM in the business strategy are:
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To simplify marketing and sales process
To make call centers more efficient
To provide better customer service

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To discover new customers and increase customer revenue
To cross sell products more effectively

The CRM processes should fully support the basic steps of customer life cycle . The basic
steps are:
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Attracting present and new customers
Acquiring new customers
Serving the customers
Finally, retaining the customers

Types of CRM
Operational CRM
Operational CRM refers to services that provide support for various „front office‟
business processes in helping organization to take care of their customers. Focus on customers‟
value is important for a successful operational CRM strategy. Different customers have to be
treated differently so information on variables like customers‟ ranking, actual value and potential
value is of strategic value.
Operational CRM is mainly focused on automation, improvement and enhancement of business
processes which are based on customer-facing or customer supporting. The main importance of a
CRM system lies on how the selling, marketing and service oriented processes are automated,
and for which operational CRM systems are embedded with following major automation
applications:
1. Marketing automation- As the name implies, marketing automation is basically focused
on automating marketing processes. In marketing, campaign management involves
marketers to use customer specific information to determine, evaluate and develop
communications that are targeted to customers in individual as well as multilevel or
multichannel environment. Campaigns developed to communicate customers individually
are easy and involves unique and direct communications. For multichannel environment
the implementation of marketing strategies and campaign management is quite difficult
and challenging. For example, some retailers have multichannel transactions like shops or
stores, wholesale stores, websites, home shopping and even television shopping. Here

integration and implementation of communication strategy is difficult and evaluation of
performance and quality of campaigns needs to be automated and should be
technologically sound across each of the channels. For handling this, a CRM marketing
strategy called event-based marketing is inherited. Using event based marketing
communication and offers are presented to customers as and when they are required. For
example, credit card customer calls the call center for inquiring the current interest rates,
this indicates that customer is specific about the interest rates and is trying to compare the
interest rates and may switch to different competitor to find specific deals which suits
him. Without wasting time the automated CRM system pops up an event of offer which is
best suited for that customer and helps to retain him back.
2. Sales-force Automation- A CRM system is not only used to deal with the existing
customers but is also useful in acquiring new customers. The process first starts with
identifying a customer and maintaining all the corresponding details into the CRM
system. This process can be distributed into many stages which includes generation of
lead and then qualifying those leads as prospects. The Sales and Field representatives
then try getting business out of these customers by sophistically following up with them
and converting them into a winning deal. Automation of selling process is efficiently
handled by Sales-force automation which automates all the methodologies or sales cycle
and above described process sophisticatedly.
3. Service Automation- Service automation deals with managing organization‟s service.
The actual interactions with customers such as contact, direct sales, direct mail, call
centers, data aggregation systems, web sites and blogs etc. are examples of operational
CRM. Each interaction with a customer can be collected to the client database generally
known as „customer‟s history‟ and the information can later be used wherever necessary.
Any one in the organization can have access to this information about customer which
gives a clear view of customers needs and important information on the customer such as
products owned, prior support calls etc. It naturally eliminates the need to obtain this
information individually from the customer. On the basis of the information, if required,
the customer can easily be contacted at right time at the right place.

The operational application of CRM enables effective interaction with customers. For
this purpose various tools are used. These contact management tools aim to reduce
costs by improved process efficiency and use of media based communication channels.
These are also aimed to provide customers with a consistent interface across all
communication channels. To achieve this relevant customer data is collected and also
displayed at all customer touch points. This is the customer master data. Another set of
data where employees' contact with customers is also logged. This has information like
topics discussed, customer requirements, soft customer data like hobbies, preferences,
interests, details about children and other minor stuffs.
Banks are an exemplary implementation of CRM as customer contact management. Channel
management tools aim to understand how customer interacts with the company. It aims to
deliver products and services across multiple channels in effective, efficient, and consistent
manner. Content management tools enable the company to manage what is visible to the
customers i.e. what the customers are able to see when they interact with the company. The
various processes undertaken are: campaign management, sales management, service
management, and complaint management.
Analytical CRM
Analytical CRM supports organizational back-office operations and analysis. It deals with all
the operations and processes that do not directly deal with customers. Hence, there is a key
difference between operational CRM and Analytical CRM. Unlike from operational CRM,
where automation of marketing, sales-force and services are done by direct interaction with
customers and determining customer‟s needs,analytical CRM is designed to analyze deeply
the customer’s information and data and unwrap or disclose the essential convention and
intension of behavior 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.
The following are the key features of analytical CRM:
 Seizing all the relevant and essential information of customers from various channels

and sources and collaboratively integrating and inheriting all this data into a central
repository knowledge base with a overall organization view.
 Determining, developing and analyzing inclusive set of rules and analytical methods to

scale and optimize relationship with customers by analyzing and resolving all the
questions which are suitable for business.
 Implementing or deploying the results to enhance the efficiency of CRM system and

processes, improve relationship and interaction with customers and the actual
business planning with customers.
 Combine and integrate the values of customers with strategic business management of

organization and value of stakeholders.
Analytical CRM is a solid and consistent platform which provides analytical applications to help
predict, scale and optimize customer relations. Advantages of implementing and using an
analytical CRM are described below.
1. Leads in making more profitable customer base by providing high value services.
2. Helps in retaining profitable customers through sophisticated analysis and making new
customers that are clones of best of the customers.
3. Helps in addressing individual customer‟s needs and efficiently improving the
relationships with new and existing customers.
4. Improves customer satisfaction and loyalty.
The power of CRM provides a lot of managerial opportunities to the organization. It implements
the customer information in an intelligent way and creates views on customer values, spending,
affinity and segmentation. Analysis is done in every aspect of business as described below:
1. Customer Analytics- This is the base analytic used to analyze customer knowledge base.
It provides a better view of customer behavior and by modeling, assessing customer

values and assessing customer‟s portfolio or profiles and creates an exact understanding
of all the customers.
2. Marketing Analytics- This helps discovering new market opportunities and seeks their
potential values. It also helps in managing marketing strategies and scale and plan
marketing performance at district, regional and national levels. Marketing analytics also
focus on campaign management and planning, product analysis and branding.
3. Sales Analytics- Sales analytic provides essential environment to plan, simulate and
predict sales volumes and profits by constantly analyzing organizational sales behavior. It
helps in pipelining all the selling opportunities in an efficient way by indulging and
improving the sales cycle.
4. Service Analytics- Analytical CRM has major role in enhancing the services which
answering all the questions regarding customer satisfaction, quality and cost of products,
complaint management etc. It even helps in improving and optimizing the services by
sophistically analyzing the service revenue and cost.
5. Channel Analytics- This type of analysis helps to determine the customer behavior on
channel preferences, like web channel, personal interaction, telephone channel etc. This
information is efficiently integrated in customers‟ knowledge base so that they can be
contacted accordingly.
The essential results produced by Analytical CRM system could diversely help the organization
to tackle customers‟ based on values. It also helps in determining which customer is best to
invest in, which can be treated at an average level and which should not be invested in.
Analytical solutions provided for most companies are integrated view of customer across
all channels and applications, campaign performance analysis, customer profitability analysis,
cross-selling and up selling. The analytical solutions help answer questions like:
1. Who are their best customers?
2. Whom they are likely to loose?
3. How to retain them?
4. How to attract new customers?
5. How to improve profitability of customers?

Relationship between Analytical and operational CRM
Collaborative CRM
Collaborative CRM deals with synchronization and integration of customer interaction and
channels of communications like phone, email, fax, web etc. with the intent of referencing the
customers a consistent and systematic way. The idea is not only enhancing the interactions but
also to increase and improve customer retention and liberty.
The various departments of company like the sales, technical support, and marketing, share the
information they collect about customers. The objective is to improve the quality of customer
service and increase customer loyalty.

Collaborative CRM entangles various departments of organization like sales, marketing, finance
and service and shares the customer information among them to highlight better understanding of
customers. For example, the information of preferred products could be shared with marketing
department so that analysis can be performed in this aspect to provide preferred products to
customers. The information regarding varied cost or price of a particular product in market
defined by customers can be delivered to finance department so that strategies could be created to
match the product cost with similar products in market and after analysis bring an affordable and
efficient product in market. The information regarding a specific service which is not installed in
the company‟s environment and intimated by the customers can be transferred to service
department to improve or install that particular service in-house. All this is done efficaciously
within the range of channels so that the process automates the needs and minimal time is required
for fulfilling these needs.
Collaborative CRM can be broadly identified by two aspects:
1. Interaction Management- This management process deals with designing the
communication or interaction channel process within an organization which is specific to
customer interaction and finally enhancing the extent of communication between both the
parties. The communication channel depends on the customers‟ preference on how they
require the interaction to be dealt with. Some customers prefer to be contacted via phone

and email because of more comfort ability or non availability of manual interaction due
to no time or unavailability of resources. Some of them prefer to have live online meeting
or web meeting to reduce the travel time and lack of time or may be they prefer more
clarified real time environment by sitting at desk and transact. Some of the customers
insist for agent conducted services which is often face-to-face interaction as they believe
that this way is more efficient and conclusive. Depending on these channels of interaction
it is very important for organization to fulfill these needs of customers and gather
information from them and implementing it into the CRM before interacting to enhance
the interaction power.
2. Channel Management- After analyzing and implementing the interaction medium it‟s
important to enhance the power of channels through which the customers are interacted.
By using latest technological aspects for improving channel interaction could help to
contact customers in an efficient way and gather information from them to help
organization to understand the customers. Hence it is important for an organization to
clearly arrange the channel responsibilities and duties.
Below are advantages of Collaborative CRM:
 Enables valued customer interaction across the channels.
 Entangles web or online collaboration to cut down service cost of customers.
 Integrates customer interaction with call centers to enable multi-channel interaction

with customers and helps them make understand the overall process vales.
 Describes a view of integrated customer‟s details during interaction to server them in a

better way.
This CRM solution brings customers, process and strategies and data together so that
organizations could serve and retain customers more efficiently.
It allows the company to synchronize and manage efficient, productive interaction with
customers, prospects, partners, and internal associates across all communication channels. The
customers' viewpoint is taken care of at every transaction level thus enabling better service to
the customer. Collaborative CRM also reduces web service costs by enabling web
collaboration.

Relationship between Analytical, Collaborative and operational CRM

CRM in Retail
Retailing is becoming the blue-eyed sector of the new emerging LPG economy employing
nearly 21 million people and generating revenues of approximately Rs.9,30,000 Crore. Organized
retailing accounts only 3-4 percent of the entire retailing activities in the country. Standing on the
threshold of a retail revolution and witnessing a fast changing retail landscape, India is all set
experience the phenomenon of a global village India presents a grand opportunity to the world at
large, to use it as a business hub. To attract customers, organized retail stores need to generate value
and differentiate their outlets from other unorganised retail stores. As rightly said, ‘Retail is Detail’ so
organized retail players need to target their markets and manage the customer experience in best
possible ways.

IMPLEMENTATION OF CRM IN RETAIL:
The building & management relationship with customers has always been a key approach to
marketing practices in general & retailing in particular. AMA (1995),“Relationship marketing is
marketing with the conscious aims to develop & manage long term and/or trusting relationship with
customers, distributors, suppliers, or other parties in marketing environment.” A band of loyalty is
likely to develop between shopkeeper and the regular customer. Pathmarajah (1993) defines
relationship marketing as “the process where the seller and the buyer join a strong
personal, professional and mutually profitable relationship over a time. Following are few suggestions
in order to maintain long term relationship with the customers in an organised retail.
1.Retailers have identified generating interest in a uniformed new customer is more difficult
than to retain the existing customer. It is easier to satisfy an existing customer than to attract a new
customer to the store. A satisfied customer is better form of advertising. A satisfied customer will
purchase more and more product from your store.

2.Through retaining a customer your can make a customer satisfied. A satisfied can be
referral to a new customer. Instead of running after new customer to your store you can make your
existing customer retain by which he can be referral to new customer.
3.Good relationship with customers can result in good work of mouth from successful
exchanges and minimal bad work-of-mouth in the event of unsuccessful exchanges. Service quality
cracks can often be papered over where good relationships have existed previously.
4.Close and long term relationships with the customers imply continuing exchange
opportunities with existing customers a lower marketing cost per customer.
5.Strong customer relationship with a high degree of familiarity and communication on both
sides can generate more practical ideas from customers and contact personnel.
6.Loyalty programme like special discount by issuing loyalty cards in order to provide them
better service and other special benefit if any can be provided to them.
7.The last but not least suggestion to maintain CRM in retail is to think to provide “Every Little
Helps” to the customer. Think always how are you going to do a better job for them? No doubt it will
change the behaviour of your retail business.
8.Encourage mutual loyalty.
9.Create value to the customers to earn their lifetime loyalty

Future of CRM
Often driven by the need to improve customer satisfaction and retention, CRM systems can aid
in understanding a customer or segment to focus sales and marketing activities. We will see more
of an appreciation that profitability is a key variable in determining cross-sell promotions,
product pricing and packaging based on historical as well as future anticipated consumer
information. Lifetime value will be better understood to allow for organizations to think about
potentially good prospects and the overall return on the relationship that is developed over time.
CRM systems will be blended with operational and back- office systems to provide a seamless,
real-time data environment. CRM will not only be about servicing the customer better, but also

servicing the customer in the best interests of the customer as well as the business itself.
While CRM may already seem to be an old and jaded term, there is a bright future ahead that
will bring new ways for small and mid-sized organizations to communicate, operate and
strategize to manage their personnel, customers and prospects.
CRM is undergoing significant changes with growing trends of social CRM, GCRM, and cloud
computing.Development in speed, reliability and spread of information channels such as Social
Media have effected B2C and gradually influences B2B.
CRM database management has grown tremendously from an aggregate level to
individualized and customized level that can be applied globally via cloud computing
Advancement of CRM have given rise to privacy issues and concerns such as identity theft,
privacy right violations, cyber stalking.
Future trends in CRM:
Social CRM (Customer Relationship Management) is use of social media services, techniques
and technology to enable organisations to engage with their customers. As an emerging
discipline, interpretations of Social CRM vary, but the most frequently quoted definition is from
Paul Greenberg:
“Social CRM is a philosophy and a business strategy, supported by a technology platform,
business rules, workflow, processes and social characteristics, designed to engage the customer
in a collaborative conversation in order to provide mutually beneficial value in a trusted and
transparent business environment”. It's the company's response to the customer's ownership of
the conversation.
Social CRM is often used as a synonym for Social Media Monitoring, where organisations watch
services like Facebook, Twitter and LinkedIn for relevant mentions of their product and brand
and react accordingly. However, this is too narrow an interpretation, as Social CRM also
includes customer communities managed by the organisation themselves.
Applications of Social CRM
Social CRM has applications in marketing, customer service and sales, including:
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peer-to-peer customer support
idea management
market research
product launch
brand reputation management

Global CRM (GCRM):
Global CRM (GCRM) refers to the Strategic application of the processes and practices of CRM
by firms operating in multiple countries, or by firms serving customers who span multiple
countries.

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Firm level GCRM: production, operation, product portfolio, and firm size .
Customer level GCRM: customer expectations, satisfaction drivers, loyalty, profitability

Informational Technology Needs Multinational enterprises are implementing Software as a
Service (SasS) models Integrate customer and company level data across various regions, lower
costs in attracting and retaining customers, Increase employee productivity and call center
efficiency, Create more accurate sales forecasting for increased customer sales and satisfaction
Global Diffusion Regional and National Heterogeneity Companies are challenged on
designing and implementing business and marketing strategies in various cultural
environments and global customers
Managers can better understand and align with their partners and clients from all regions
Facilitating the process of making informed decisions
Adapting appropriately to the economic, culture, and political climates of each area of business
Applying it as a firm Essential to develop a uniform outlook on GCRM strategy in order to adapt
and implement it on a regional or national level
Develop a CRM strategy at the highest level of management, but leave room for needed
adaptability

Database CRM
CRM needs more cost-efficient digital platforms for using, accessing and constantly updating
the databases. Cloud Computing Allows for more accessible and customizable implementation
of CRM pratices
Database CRM allows for remote access and real time updating in order to keep up with the
dynamic and evolving nature of databases.
It can be applied easily and are economical without any infrastructure or maintance obstacles

Future aspects of CRM in marketing:
1.
Web Marketing- With the growing popularity of web, customers are tending towards
web marketing or web shopping. This helps both customers and suppliers to transact in a real
time environment irrespective of their locations. Some of the major advantages of Web
Marketing are listed below:





2.

It is relatively very inexpensive as it reduces the cost for physically reaching to the
target customers for interaction.
Suppliers can reach to more number of customers in lesser amount of time.
The online marketing campaigns can be easily tracked, traced, calculated and tested.
The selection process of any product or brand is simplified due to proven online
research and analysis techniques.
Online marketing campaigns are more promotional as compared to manual campaigns.
Email Marketing- Email marketing has turned out to be more efficacious and

inexpensive as compared to mail or phone based marketing strategies. Email marketing is direct
marketing which is data driven and leads to more accurate customer response and effective
fulfillment of customer needs. More attractive features include newsletters, sending of eCoupons,
eCards, provision of saving events into calendars etc.
3.
Analyzing customers buying behavior online- A CRM system provides a platform to
analyze the customers buying behavior online. This interactive strategy provides great accuracy
with high speed which includes profiling services furnishing elaborated bits of information
regarding customers purchasing habits or behavior. Individualized analysis of this behavior also
helps to identify to which product or brand the customers are more tended. For example an
online selling website www.xyz.com can analyze the customers buying behavior by installing an
in-house service with the help of a full-fledged CRM that checks what all products are being
purchased by a particular customer and under which specific group they fall. This is achieved by
personalized analyzing the buying history of customers in the past which predicts the future
business with those customers also. This accomplishes to build a long-term relationship with
customers by properly canvassing customer needs and resulting in customer satisfaction.
Analyzing this particular buying behavior of customers online also helps to fix or change of
marketing techniques or strategies to mould the system according to the future perspectives.
4.
Forecasting future marketing strategies- Down the line marketing strategies keeps on
changing according to the emotional behavioral change of customers. CRM market forecasting
techniques help to understand this change through regression and statistical analysis of customer
behavior online. These are some complex but more accurate analysis techniques provided by
CRM system which are proved to be one of best marketing strategies. This innovative approach
is carried out with greater risks but is believed to outturn astonishing rewards.
5.
Building business impact models- It is important for an organization to have check on
marketing performance regularly so that the techniques never deteriorate and always match to
yield greater results. These CRM oriented models help in delivering accurate measurement of
marketing performance throughout the organization and to do better every time.
These synergistic marketing strategies make a part of CRM system to develop high-end
marketing business. Hence it is very important for an organization to incorporate them by
carefully anticipating change, testing their performance and assembling the best possible
combination of these strategies to meet the needs of the customers and maximize its marketing
growth.

CHAPTER-II

Chapter-2
CRM Process:

Every business has to focus on the needs of the customer. CRM (Customer relationship management)
is the array of processes that help a company to understand the preferences or dislikes of individual
customers in order to build lasting relationships. CRM solutions help to safely store volumes of
customer data in an organized easy-toaccess manner. By analyzing this data businesspersons can
determine individual customer behavior, analyze preferences and provide one-to-one services to
maximize customer satisfaction. Such a customer-centric approach helps to augment customer
loyalty and increase their value to the company. CRM, Customer Relationship Management is a
business strategy that enables organizations to get closer with their customers, to better serve their
needs, improve customer service, enhance customer satisfaction and thereby maximize customer
loyalty and retention.
The present business scenario assigns great emphasis on managing business customers.Organizations
are quickly recognizing that in order to survive competition it is important to grab customer attention
with unique brand identity and superior service levels. Businesses which initially focused on finance
/ sales / marketing management are now shifting their priority towards customer relationship
management. CRM solutions are flooding the market with easy-to-use tools to manage business
customers. The CRM is a set of internal standards and business protocols related to customer service
(the type of service you want or would want to provide for buyers). Quite often, to increase corporate
profitability, we segment customers into several categories (for example, with the aid of ABC
analysis) and develop various methods to serve buyers depending on which group the customer
belongs to. It refers to the methodologies and tools that help businesses manage customer
relationships in an organized way. CRM, Customer Relationship Management is a business
philosophy towards customers. To focus on their needs and improve customer relationships, with a
view to maximize customer satisfaction. It encompasses the variety of technology employed to
streamline customer interaction to find, acquire and retain customers.

If you look at the image above you will see that information flows in the following way:










The community provides feedback via offline or online channels.
If the channel is online then it is monitored and picked up by a “listening” tool which
then integrates with a CRM system to provide customer information. If the channel is
offline then it goes directly into a CRM system.
The information collected is automatically routed to the proper person in the proper
department (several vendors are in the process of working on this to make it happen,
others have some form of this developed already).
Once the person receives the information they can decide how to respond which will
either be a macro response (public) or a micro response (private), or both.
The response is funneled through business rules which will dictate how and where the
response will take place.
The response is once again captured by the CRM system so that the record is complete.

Objectives and benefits of CRM Process

CRM processes that help identify and target their best customers, generate quality sales leads, and
plan and implement marketing campaigns with clear goals and objectives;
● CRM processes that help form individualized relationships with customers (to improve customer
satisfaction) and provide the highest level of customer service to the most profitable customers;
● CRM processes that provide employees with the information they need to know their customers‟
wants and needs, and build relationships between the company and its customers.
Customer relationship management tools include software and browser-based applications that
collect and organize information about customers. For instance, as part of their CRM strategy, a
business might use a database of customer information to help construct a customer satisfaction
survey, or decide which new product their customers might be interested in.
eCRM
●

The eCRM or electronic customer relationship management encompasses all the CRM functions with
the use of the net environment i.e., intranet, extranet and internet. 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.

Major differences between CRM and eCRM:
Customer contacts



CRM – Contact with customer made through the retail store, phone, and fax.
eCRM – All of the traditional methods are used in addition to Internet, email, wireless,
and PDA technologies.

System interface



CRM – Implements the use of ERP systems, emphasis is on the back-end.
eCRM – Geared more toward front end, which interacts with the back-end through use of
ERP systems, data warehouses, and data marts.

System overhead (client computers)



CRM – The client must download various applications to view the web-enabled
applications. They would have to be rewritten for different platform.
eCRM – Does not have these requirements because the client uses the browser.

Customization and personalization of information



CRM – Views differ based on the audience, and personalized views are not available.
Individual personalization requires program changes.
eCRM – Personalized individual views based on purchase history and preferences.
Individual has ability to customize view.

System focus



CRM – System (created for internal use) designed based on job function and products.
Web applications designed for a single department or business unit.
eCRM – System (created for external use) designed based on customer needs. Web
application designed for enterprise-wide use.

System maintenance and modification



CRM – More time involved in implementation and maintenance is more expensive
because the system exists at different locations and on various servers.
eCRM – Reduction in time and cost. Implementation and maintenance can take place at
one location and on one server.

Components of eCRM Solutions

As we implement eCRM process, there are three steps life cycle:
1. Data collection: About customers preference information for actively (answer
knowledge) and passively (surfing record) ways via website, email, questionnaire.
2. Data aggregation: Filter and analysis for firm‟s specific needs to fulfill their customers.
3. Customer interaction: According to customer‟s need, company provide the proper
feedback them.
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.
Product Offerings in the CRM Market Space

Selecting a CRM program means finding the software that fits the company‟s needs. All the
CRM software comes many features and tools, and despite the fact that many of CRM product
offer similar feature sets, there are some unique tools in each one. Programs can be divided into
categories by the following criteria: Features mean how well it integrates with other applications
(ex. Outlook, Gmail, iCall etc.) and how accessible information is. It covers everything from
calendar alerts and to-do lists to mobile access and synchronization capabilities. Contact
information ranking outlines the program‟s ability to store specific information for each contact.
Business world is a fast-paced so managers are need to be able to access customer‟s information
quickly. Sales and marketing tools designed to help and maintain current clients and gain new
ones. Important that this tools help find campaigns with positive ROI and those that are not
performed. Ease of use is about app‟s design.Programs are checked on clean, quick navigation
and easy-to-locate of the most important items. Help and support is about what support CRM
software manufacturer provides for their product.
I.

II.

III.

IV.

V.

SaaS CRM Software
a. These are software created “on-demand” which are available via Internet and do
not require install and support. Vendors do not buy it, they have a rent payment
per month.
Sales Force
a. This software allows the company automatically track all the web activity
generated from marketing and automatically sets the Lead Source as Marketing:
Website.
BPMonline CRM
a. The solution‟s built-in features and process management tools let the company
automate all its CRM activities, driving greater response of the marketing
campaigns, more closed deals, and customer service.
AmoCRM
a. AmoCRM's software assists the manager, sales team and sales management with
full contact management, lead management, and sales pipeline reporting and
analysis. For the B2B CRM needs, amoCRM's software is a user friendly, cost
effective approach. It comes scalable to meet future growth needs without having
to change platforms and retrain.
Oracle CRM on Demand
Oracle's CRM solutions help organizations drive sales, marketing, loyalty, and service
effectiveness. It has solutions for different types of industries: Medical, Pharma, High
Technology, Insurance, Automobile, Wealth Management.

Contact Centers for CRM

The CRM Roadmap/CRM Strategy

Following points need to be considered while implementing a CRM System
● Evaluate the Need: The retailer needs to formulate a deployment strategy based on the needs and
target customers.
● Basic Characteristics of a CRM System: In order to be effective the CRM system should:
i) Have the ability to recognise a customer with unique ID
ii) Should be integrated with POS System
iii) May be card based or card less
iv) Ability to run communication campaign
v) Ability to study customer behaviour and divide into segments based on various parameters.
● SaaS Model: Implementing a CRM System can be an expensive proposition. It makes sense to
consider Software-as-a-Service applications where they are typically priced on a monthly basis. The
retailer can discontinue any time if they are not getting a return on their investment (ROI).
● Integrated CRM System: POS applications that include CRM in the suite typically offer
inventory control and sales management functionality that retailers will require anyways. This
integrated solution can bring in better focus and can reduce duplication of data. This in turn would
bring greater efficiency to the overall business of the retailer. However this should be considered
after evaluating the current and future requirements of a business.

Hidden Cost of CRM Implementation: The costs of executing marketing campaigns (postage
and mail supplies, bulk email software, and employee time) can be hidden costs that need to be
factored in when considering the total cost of retail CRM system.
● Integration with other office functions: To truly accomplish the customer experience, along with
the CRM System, the retailer must address the back-office, integrating multiple technologies such as
point-of-sale, accounting, inventory, human resources, and marketing, with mobile and social media,
among others.
Operational issues in implementing CRM
●

Best-of-breed CRM systems such as Microsoft Dynamics CRM, Sage ACT, and Salesforce.com can
be implemented as standalone systems to track customer information. However, many retailers will
choose to implement CRM programmes as part of an integrated suite of modules for point of sale
(POS) and inventory control. The decision as to how to implement software will be based on the size
of the company and the extensiveness of the buyer‟s needs.
Typically these requirements generally vary by the scale of operation of the retailers and his
customer orientation. These requirements can be broadly categorized under the following types:● Small buyers: Small retailers with fewer than five locations will find that their CRM needs are
often met sufficiently by POS software that includes modules for customer information tracking.
These POS systems integrate sales, inventory, and customer data into one system. It makes easy for
small businesses to market to a smaller user base.
● Best-of-breed buyers: These buyers typically work for larger retail businesses. They have much
larger customer bases than small businesses and have a lot more to gain. Their marketing needs are
typically more robust due to promotions, new product offerings, and the size of their customer
databases.
● Multi-channel retailers: These buyers work for organizations that do extensive sales across
numerous channels including websites, brick and mortar locations, and special events. They are
collecting customer information from a wide variety of sources and marketing to customers via
email, phone, and print campaigns.

CHAPTER-III

Chapter-3
Customer Retention

Customer retention is the activity that a selling organization undertakes in order to reduce
customer defections. Successful customer retention starts with the first contact an organization
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 STRATEGIES

1. Reducing Attrition
Virtually every business loses some customers, but few ever measure or recognise how many of
their customers become inactive. Most businesses, ironically, invest an enormous amount of
time, effort and expense building that initial customer relationship. Then they let that relationship
go unattended, in some cases even losing interest as soon as the sale been made, or even worse,
they abandon the customer as soon as an easily remedied problem occurs, only to have to spend
another small fortune to replace that customer. The easiest way to grow your business is not to
lose your customers. Once you stop the leakage, it‟s often possible to double or triple your
growth rate because you‟re no longer forced to make up lost ground just to stand still.
2. Sell and then sell again
So many people do an excellent job of making the initial sale, then drop the ball and get
complacent, ignoring the customer, while they chase more business. Your selling has actually
only just begun when someone makes that initial purchase decision because virtually everyone is
susceptible to buyer‟s remorse. To lock in that sale, and all of the referrals and repeat business
that will flow from it, you need to strike while the iron is hot to allay your customers‟ fears and
demonstrate by your actions that you really care. You should thank them and remind them again
why they‟ve made the right decision to deal with you … and put a system in place to sell to them
again, and again, constantly proving that they made the right decision.
3. Bring back the “lost sheep”
There‟s little point in dedicating massive resources to generating new customers when 25-60%
of your dormant customers will be receptive to your attempts to regenerate their business if you
approach them the right way, with the right offer. Reactivating customers who already know you

and your product is one of the easiest, quickest ways to increase your revenues. Re-contacting
and reminding them of your existence, finding out why they‟re no longer buying, overcoming
their objections and demonstrating that you still value and respect them will usually result in a
tremendous bounty of sales and drastically increased revenues in a matter of days … and will
lead to some of your best and most loyal customers.
4. Frequent Communications Calendar
Avoid losing your customers by building relationships and keeping in touch using a rolling
calendar of communications. This is a programmed sequence of letters, events, phone calls,
“thank you‟s”, special offers, follow-ups, magic moments, and cards or notes with a personal
touch etc. that occur constantly and automatically at defined points in the pre-sales, sales and
post-sales process. People not only respond to this positively, they really appreciate it because
they feel valued and important. It acknowledges them, keeps them informed, offsets postpurchase doubts, reinforces the reason they‟re doing business with you and makes them feel part
of your business so that they want to come back again and again.
5. Extraordinary Customer Service
The never-ending pursuit of excellence to keep customers so satisfied that they tell others how
well they were treated when doing business with you. Moving the product or service you deliver
into the realm of the extraordinary by delivering higher than expected levels of service to each
and every customer. Key facets include: dedication to customer satisfaction by every employee;
providing immediate response; no buck passing; going above and beyond the call of duty;
consistent on-time delivery; delivering what you promise before AND after the sale; a zerodefects and error-free-delivery process and recruiting outstanding people to deliver your
customer service. Extraordinary service builds fortunes in repeat customers, whereas poor
service will drive your customers to your competition.
6. Courtesy system
A powerful system that improves the interpersonal skills of your team and changes the spirit of
your organisation. It involves speaking to colleagues politely and pleasantly, without sarcasm or
parody, and treating them at least as well as you would want them to treat your customers. This
will help your team to feel worthwhile and important, which makes for pleasant social contacts at
work. It also motivates them to provide extraordinary service, encourages them to be consistently
pleasant in all of their dealings and to relate to customers in a warm, human and natural manner.
This results in better, warmer, stronger, more trusting relationships and longer term bonds with
your customers.
7. Product or service integrity
Long-term success and customer retention belongs to those who do not take ethical shortcuts.
There must always be total consistency between what you say and do and what your customers
experience. The design, build quality, reliability and serviceability of your product or service
must be of the standard your customers want, need and expect. Service integrity is also

demonstrated by the way you handle the small things, as well as the large. Customers will be
attracted to you if you are open and honest with them, care for them, take a genuine interest in
them, don‟t let them down and practice what you preach … and they will avoid you if you don‟t.
8. Measure lifetime value
There‟s a vast difference between the one-off profit you might make on an average sale, which
ignores the bigger picture, and the total aggregate profit your average customer represents over
the lifetime of their business relationship with you. Once you recognise how much combined
profit a customer represents to your business when they purchase from you again and again, over
the months, years or decades, you‟ll realise the critical importance of taking good care of your
customers. And because you‟ll understand just how much time, effort and expense you can
afford to invest in retaining that customer, you‟ll be in control of your marketing expenditure.
9. A complaint is a gift
96 percent of dissatisfied customers don‟t complain. They just walk away, and you‟ll never know
why. That‟s because they often don‟t know how to complain, or can‟t be bothered, or are too
frightened, or don‟t believe it‟ll make any difference. Whilst they may not tell you what‟s wrong,
they will certainly tell plenty of others. A system for unearthing complaints can therefore be the
lifeblood of your business, because customers who complain are giving you a gift, they‟re still
talking to you, they‟re giving you another opportunity to return them to a state of satisfaction and
delight them and the manner in which you respond gives you another chance to show what
you‟re made of and create even greater customer loyalty.
Other customer retention strategies include:
1. Blogs
2. CRM Systems
3. Loyalty Programs
4. Magic Moments
5. Overcome Buyers Remorse
6. Personal Touches
7. Premiums and Gifts
8. Questionnaires and Surveys
9. Regular Reviews
10. Social Media
11. Welcome Book

Customer interaction management (CIM)
Customer Interaction Management (CIM) refers to a type of Enterprise Software Application which is
responsible for managing the interaction between an organisation and its customers. Normally, a CIM
application will be deployed in a contact centre and used by the agents while communicating with
clients customers of the organisation. Customer Interaction Management systems handle
communication across multiple different channels, such as e-mail, SMS, telephone, Instant Messaging,
whitemail (scanned documents), and so on.
CIM is a mix of traditional CRM solutions with suite of Web-based interaction solutions and wireless
device transaction management
.•CIM optimizes every interaction with customers, regardless of channel or contact point
•CIM requires a centralized information center, applied analytics, and interaction software that can
deploy centralized decisions throughout various business processes.

FACTORS INFLUENCING CIM.
Customer Interaction Management cannot be solely referred to as a technical model. Instead it is
a carefully devised entrepreneurship activity implemented using available technology and
information sciences. The parameters governing the success and failure of a CIM practice
differs with industries and its correct implementation requires a thorough understanding of the
business the CIM practice must cater to. This is far more important than analyzing the industrycustomer relationship patterns.
It is a real-time process and hence it needs regular monitoring, strategic planning, efficient
control algorithms and most importantly correct implementation. The single most basic thing that
affects the success of the CIM model is the involvement of the people who are best suited for the
job. An ineffective taskforce is worse than having none at all. The performance and customer
related data acquisition during the process should be utilized to its fullest potential to device the
correct approach for the future.
CIM practices are also dependent on the marketing strategies and the stakeholder‟s belief in that
particular industrial venture. No such practice can succeed if the stakeholders lose faith in the
effectiveness of the industry and if no action is taken to restore faith. A major hurdle where most
CIM modules crumble is the cost prediction for the project and budgeting. Both of these things
must be communicated to customers with great clarity to prevent ambiguity which will
ultimately tar the customer relations.
One of the main causes behind the failure of CIM practices is that these often disrupt the
operations of the other departments of the industry. Thus, there should be a proper and accepted
balance between them. The CIM model must not be too complicated to be implemented
successfully because that reduces the belief of the employees in its utility and strains the entire
process.
Summing up, Customer Interaction Management practices are a synergistic integration of
technical and management tools which are not only effected by the efficiency of the information
technology involved but also by the managerial effort, employee commitment and the customer‟s
belief in the industry‟s credibility.

CHAPTER-IV

Chapter-4
CUSTOMER LOYALTY

Likelihood of previous customers to continue to buy from a specific organization.
Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in
higher quantities and bring you even more customers. However, that focus is not how you build
customer loyalty.
You build loyalty by…






keeping touch with customers using email marketing, thank you cards and more.
treating your team well so they treat your customers well.
showing that you care and remembering what they like and don‟t like.
You build it by rewarding them for choosing you over your competitors.
You build it by truly giving a damn about them and figuring out how to make them more
success, happy and joyful.

In short, you build customer loyalty by treating people how they want to be treated.
Concept of customer loyalty
Whether a particular customer is satisfied after purchasing a product/service depends upon his
expectations in relation with the performance of offer. Generally, satisfaction is a personal
feeling of happiness or disappointments resulting from comparing expectations and performance
of the product/service. If the performance does not exceed customer expectations, the customer
is dissatisfied. If the performance matches the customer expectation, the customer is satisfied. If
the performance exceeds expectations of customer, the customer is highly satisfied or delighted
and becomes loyal towards business.
Remember that there may be many business organisations that can satisfy their customers, but
there are very few businesses that really treat the customer as “The King” and keep them in the
center of their business operations. It is needless to mention that it is the customer delight (and
not merely satisfaction) that brings long term customer loyalty to the business.
According to Keki R. Bhote,”Customer satisfaction is but a milestone on the long, hard road to
customer loyalty and lifelong retention. Customer loyalty is the flip side of the same coin called
company profit”.
Once a company delights its customers and divert them towards loyalty, company can easily
enjoy the benefits of customer retentions. The concept of retailing itself focuses on customer
satisfaction and delight.
Key steps for customer loyalty and retention
No business can get loyal customers without hard work and proper marketing strategies. To gain
loyal customers and to retain them with the business, Following are some key points which lead
to increase customer loyalty and retention:
i) Main objective of the top level management should be to add value for customers, by
providing product/service of best quality, with fare price, in cyclic time and serve better than
their competitors.

ii) Making long-term key strategies for customer loyalty and retention.
iii) Managers must spend at least 25% of their time with core customers.
iv) Main goal of managers should be to retain customers, which automatically leads to
achievement of sales target.
Customer Loyalty Grid
With the help of Brian Ward‟s customer loyalty grid, we can easily understand, what
customers really want and what make them feel happy and loyal.

Let us discuss each zone in detail:
1) The Zone of Indifference (Unstated/expected)
Zone of indifference includes all the basic expectations which are to be fulfilled by the business.
Customers generally expect that they should be treated as valuable and important with respect. If
business does not perform according to their expectations, they feel insulted, which cause
dissatisfaction. If business meet this basic and obvious need, business can hope for is
indifference.
2) The Zone of Satisfaction (Stated/Expected)
This is the zone where customers actually tell what‟s their need? and what‟s important to them?
Here, business listen them very carefully, as this is the first step to customer loyalty. Meeting
their needs and expectations will cause satisfaction and whereas not meeting their needs and
expectations will cause dissatisfaction. For example, a customer might expect discount on a
purchase, but knows that he has to specifically ask (or negotiate) for it. It is an expectation,
simply because other organizations that the customer deals with provide this benefit.
3) The Zone of Delight (Stated/unexpected)
Here customer expects something extra from retailers, which is generally unexpected but if a
retailer meets his/her need, will definitely create a solid customer loyalty base. For example, a

customer might expect a product of high quality on reasonable price but this particular product
falls under premium price, here is the opportunity for retailer to delight his customer by meeting
his/her expectation.
4) The Zone of Loyalty (Unstated/Unexpected)
Exceeding customer‟s expectations even if customer is aware, will create loyal customer. This
requires retailers to be really proactive in suggesting to customers new innovations that they can
really benefit from. Many customers will be even willing to pay extra for this. For example,
airbags in automobiles when first introduced were an innovation that saved lives, but customers
had no way of asking for this innovation, or expecting it, before it became known to them.
To get to the Zone of Loyalty, first meet the first three zones, because all zones are equally
important. If retailers meet basic expectations of customers and satisfy them with proper service
then it will create loyal customers.
Customer Loyalty Programme
A customer loyalty programme is a system whereby a customer has specifically signed up for a
programme. The customers may receive a plastic card with their name encrypted on it. These
Whether a particular customer is satisfied after purchasing a product/service depends upon his
expectations in relation with the performance of offer. Generally, satisfaction is a personal
feeling of happiness or disappointments resulting from comparing expectations and performance
of the product/service. If the performance does not exceed customer expectations, the customer
is dissatisfied. If the performance matches the customer expectation, the customer is satisfied. If
the performance exceeds expectations of customer, the customer is highly satisfied or delighted
and becomes loyal towards business.
Remember that there may be many business organisations that can satisfy their customers, but
there are very few businesses that really treat the customer as “The King” and keep them in the
center of their business operations. It is needless to mention that it isthe customer delight (and
not merely satisfaction) that brings long term customer loyalty to the business.
According to Keki R. Bhote,”Customer satisfaction is but a milestone on the long, hard road to
customer loyalty and lifelong retention. Customer loyalty is the flip side of the same coin called
company profit”.
Once a company delights its customers and divert them towards loyalty, company can easily
enjoy the benefits of customer retentions. The concept of retailing itself focuses on customer
satisfaction and delight. We have already discussed the benefits of customer loyalty in Unit 4 and
talked about the adverse affect of the negatively satisfied customers (as they can harm the
product or retailer‟s image more than its competitors).
Key steps for customer loyalty and retention
No business can get loyal customers without hard work and proper marketing strategies. To gain
loyal customers and to retain them with the business, Following are some key points which lead
to increase customer loyalty and retention:
i) Main objective of the top level management should be to add value for customers, by
providing product/service of best quality, with fare price, in cyclic time and serve better than
their competitors.
ii) Making long-term key strategies for customer loyalty and retention.
iii) Appointment of Chief Customer Officer (CCO) to deal with customer related view points.
iv) Managers must spend at least 25% of their time with core customers.
v) Main goal of managers should be to retain customers, which automatically leads to
achievement of sales target.

Customer Loyalty Grid
With the help of Brian Ward‟s customer loyalty grid, we can easily understand, what customers
really want and what make them feel happy and loyal.

Let us discuss each zone in detail:
1) The Zone of Indifference (Unstated/expected)
Zone of indifference includes all the basic expectations which are to be fulfilled by the business.
Customers generally expect that they should be treated as valuable and important with respect. If
business does not perform according to their expectations, they feel insulted, which cause
dissatisfaction. If business meet this basic and obvious need, business can hope for is
indifference.
2) The Zone of Satisfaction (Stated/Expected)
This is the zone where customers actually tell what‟s their need? and what‟s important to them?
Here, business listen them very carefully, as this is the fist step to customer loyalty. Meeting
their needs and expectations will cause satisfaction and whereas not meeting their needs and
expectations will cause dissatisfaction.
For example, a customer might expect discount on a purchase, but knows that he has to
specifically ask (or negotiate) for it. It is an expectation, simply because other organizations that
the customer deals with provide this benefit.
3) The Zone of Delight (Stated/unexpected)
Here customer expects something extra from retailers, which is generally unexpected but if a
retailer meets his/her need, will definitely create a solid customer loyalty base. For example, a
customer might expect a product of high quality on reasonable price but this particular product
falls under premium price, here is the opportunity for retailer to delight his customer by meeting
his/her expectation.
4) The Zone of Loyalty (Unstated/Unexpected)

Exceeding customer‟s expectations even if customer is aware, will create loyal customer. This
requires retailers to be really proactive in suggesting to customers new innovations that they can
really benefit from. Many customers will be even willing to pay extra for this. For example,
airbags in automobiles when first introduced were an innovation that saved lives, but customers
had no way of asking for this innovation, or expecting it, before it became known to them.
To get to the Zone of Loyalty, first meet the first three zones, because all zones are equally
important. If retailers meet basic expectations of customers and satisfy them with proper service
then it will create loyal customers.
Customer Loyalty Programme
A customer loyalty programme is a system whereby a customer has specifically signed up for a
programme. The customers may receive a plastic card with their name encrypted on it. These
cards can be used when they shop and these customers with cards are given some benefits.
From group cards, like Green Card from Pantaloon, to cards enrolling multiple sellers and cards
only of a limited cash value launched by Ad Labs and PVR cinema for movie tickets. India has
lapped up card technology in retailing, in various formats with a high degree of enthusiasm.
Everyone is trying to create maximum value generated for the organisation by creating of
superior customer equity. Modern retail outlets of India which are still taking a shape and
growing at an exponential rate have already launched loyalty cards as a quintessential strategy.
Big Bazaar has joint credit cards with ICICI, Vishal Mega Mart has a joint Credit card with SBI,
and Reliance has come up with its own credit card. Lifestyle, for instance, has a loyalty
programme called „The Inner Circle‟.
Rewards programmes, such as „Club West‟ from Westside and „First Citizen‟ from Shoppers
Stop, are also in competition to attract and retain the customer. Small retail chains like Ritu
Wears, Globus, Saboo, Bombay Selection, CTC plaza etc also enroll customer in their loyalty
programmes.
Loyalty programmes help retailers by :
 Decreasing price competition
 Increasing switching costs
 Decreasing marketing costs
 Building trust and positive customer relationships
 Strengthening the brand
 Increasing the share of wallet (share of expenditures)
The potential of a loyalty programme to attract members depends not only on the value of the
rewards it offers, but also on when the rewards are available.

Loyalty schemes
Loyalty schemes are designed to stimulate behavioural loyalty, based on the principle
of rewarding customers for the intensity of their purchases and the shopping value. The
first programs of this type appeared in the air transportation services sector, at the initiative of
Southwest Airlines (Gilbert, 1996). The company offered travellers the opportunity to collect
evidence of purchase, which could be further exploited as a free flight for a partner. However,
the loyalty schemes currently used by many organizations have developed their structure
starting from the frequent flyer programme launched by American Airlines in1981 as a
Advantage. The company’s goal was to benefit from the underutilized capacity by transforming

it into an efficient marketing tool to boost customer loyalty (Gilbert andKarabeyekian, 1995).
The premise from which the management started was that air transport companies have been
facing very high fixed costs, which are not decreased whether the transport capacity is used at
35 per cent or 95 per cent level. Therefore, American Airlines managers have realized that
covering empty places will have little impact on costs, but a significant impact on future
customer demand. Consequently, customers who were making frequent flights were identified
in the reservation system in order to be rewarded with free flights. The model of this program
has been further analyzed and imitated by companies activating in many other economic
sectors, being implemented in hotels, restaurants, gas stations,retail stores, libraries, and so on.
The operating mechanism of most of the loyalty schemes has evolved over time (Filip, 2011).
If the initial emphasis was on collecting stamps or proof of purchase, card-based schemes were
developed in a more advanced stage. The firstcards were anonymous, without the participant‟s
name mentioned. Then, magnetic stripe cards have been launched, fallowed by chip cards that in
addition to recordingnumerous transactions and personal data, also provides a high level of
security. To join the program and receive a card, consumers must fill in a registration form,
providing demographic, behavioural or even psychographic information. Currently, there have
been developed integrated loyalty schemes, involving the participation of various companies
from different industries, usually working in complementary fields. For instance, customers of an
airline company can collect flight miles by using the products and services belonging to any
partner company, such as gas stations, hotels, fast food, financial and banking institutions, etc.
Customers are registered within the loyalty program and receive one single card that they use to
collect points from all purchase and consumption locations included in the scheme. Points can be
usually converted in a wide range of products and services from the portfolio of the companies
involved in the program. To be effective, it is recommended that loyalty schemes to meet a
number of conditions, needed to create value and to be favourably perceived by consumers
(O‟Brien and Jones,1995).

Customer life time value: Meaning:

In marketing, customer lifetime value (CLV) (or often CLTV), lifetime customer value
(LCV), or user lifetime value (LTV) is a prediction of the net profit (or gross profit for start-ups

attributed to the entire future relationship with a customer. The prediction model can have
varying levels of sophistication and accuracy, ranging from a crude heuristic to the use of
complex predictive analytics techniques.
Customer lifetime value (CLV) can also be defined as the dollar value of a customer relationship,
based on the present value of the projected future cash flows from the customer relationship.
Customer lifetime value is an important concept in that it encourages firms to shift their focus
from quarterly profits to the long-term health of their customer relationships. Customer lifetime
value is an important number because it represents an upper limit on spending to acquire new
customers.
PURPOSE :
The purpose of the customer lifetime value metric is to assess the value of each customer. As
Don Peppers and Martha Rogers are fond of saying, “some customers are more equal than
others.” Customer lifetime value (CLV) differs from customer profitability or CP (the difference
between the revenues and the costs associated with the customer relationship during a specified
period) in that CP measures the past and CLV looks forward. As such, CLV can be more useful
in shaping managers‟ decisions but is much more difficult to quantify. While quantifying CP is a
matter of carefully reporting and summarizing the results of past activity, quantifying CLV
involves forecasting future activity.
Customer lifetime value (CLV):
The present value of the future cash flows attributed to the customer during his/her entire relationship
with the company.

Present value is the discounted sum of future cash flows. We discount (multiply by a carefully
selected number less than one) future cash flows before we add them together to account for the
fact that there is a time value of money. The time value of money is another way of saying that
everyone would prefer to get paid sooner rather than later and everyone would prefer to pay later
rather than sooner. The exact discount factors used depend on the discount rate chosen (10% per
year as an example) and the number of periods until we receive each cash flow (dollars received
10 years from now must be discounted more than dollars received five years in the future).
The concept of CLV is nothing more than the concept of present value applied to cash flows
attributed to the customer relationship. Because the present value of any stream of future cash
flows is designed to measure the single lump sum value today of the future stream of cash flows,
CLV will represent the single lump sum value today of the customer relationship. Even more
simply, CLV is the dollar value of the customer relationship to the firm. It is an upper limit on
what the firm would be willing to pay to acquire the customer relationship as well as an upper
limit on the amount the firm would be willing to pay to avoid losing the customer relationship. If
we view a customer relationship as an asset of the firm, CLV would present the dollar value of
that asset.

One of the major uses of CLV is customer segmentation. It starts from the truth that not all
customers are equally important. Once a company accepts this truth, CLV-based segmentation
model allows the company to figure out the most profitable group of customers, understand the
customers' common characteristics and focus more on them rather than on mediocre customers.
CLV-based segmentation can be combined with Share of Wallet (SOW) model, aiming to find
"high CLV but low SOW" customers and strategically invest the company's marketing resources
on those customers to maximize its return.
“Customer Lifetime Value metrics are used mainly in relationship-focused businesses, especially
those with customer contracts. Examples include banking and insurance services,
telecommunications and most of the business-to-business sector. However, the CLV principles
may be extended to transactions-focused categories such as consumer packaged goods by
incorporating stochastic purchase models of individual or aggregate behavior.
Dimension of CLTV
Measurement of CLTV

When margins and retention rates are constant, the following formula can be used to calculate
the lifetime value of a customer relationship:
Customer lifetime value ($) = Margin ($) * (Retention Rate (%) ÷ [1 + Discount Rate (%) Retention Rate (%)])

The model for customer cash flows treats the firm‟s customer relationships as something of a
leaky bucket. Each period, a fraction (1 less the retention rate) of the firm‟s customers leave and
are lost for good.
The CLV model has only three parameters: (1) constant margin (contribution after deducting
variable costs including retention spending) per period, (2) constant retention probability per
period, and (3) discount rate. Furthermore, the model assumes that in the event that the customer
is not retained, they are lost for good. Finally, the model assumes that the first margin will be
received (with probability equal to the retention rate) at the end of the first period.
The one other assumption of the model is that the firm uses an infinite horizon when it calculates
the present value of future cash flows. Although no firm actually has an infinite horizon, the
consequences of assuming one are discussed in the following.
Under the assumptions of the model, CLV is a multiple of the margin. The multiplicative factor
represents the present value of the expected length (number of periods) of the customer
relationship. When retention equals 0, the customer will never be retained, and the multiplicative
factor is zero. When retention equals 1, the customer is always retained, and the firm receives the
margin in perpetuity. The present value of the margin in perpetuity turns out to be the Margin
divided by the Discount Rate. For retention values in between, the CLV formula tells us the
appropriate multiplier.

Advantages of CLV:
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management of customer relationship as an asset
monitoring the impact of management strategies and marketing investments on the value of
customer assets, e.g.: Marketing Mix Modeling simulators can use a multi-year CLV model to
show the true value (versus acquisition cost) of an additional customer, product up-sell
determination of the optimal level of investments in marketing and sales activities
encourages marketers to focus on the long-term value of customers instead of investing
resources in acquiring "cheap" customers with low total revenue value
implementation of sensitivity analysis in order to determinate getting impact by spending extra
money on each customer
optimal allocation of limited resources for ongoing marketing activities in order to achieve a
maximum return
a good basis for selecting customers and for decision making regarding customer specific
communication strategies
measurement of customer loyalty (proportion of purchase, probability of purchase and
repurchase, purchase frequency and sequence etc.)

The Disadvantages of CLV do not generally stem from CLV modeling per se, but from its
incorrect application.

CVM(Customer value management)
CVM is a measure of a company’s customers’ view of the perceived value for money delivered relative
to that of their competitors’ customers. It is sometimes known as a Customer Value Added (CVA)
approach.
How is Customer Value Management (CVM) measured and calculated?

The perception of a product or service‟s value in the market place can be measured through
surveys which ask customers a series of predefined questions. These questions are also asked of
the competitors‟ customers to establish the equivalent value for competitors‟ offers. A simple
calculation gives a ratio score based around a parity score of 1 when comparing your business
with the competition. The higher the score above 1 the greater the relative competitive advantage
for that company, and as the score falls below 1 the greater the level of competitive weakness.

Although a score of 1.00 is direct parity with the competition, analysis of companies implementing this
approach has shown that scores in the range 0.98-1.02 should also be considered parity. In this range
neither the competitive advantage nor weakness is substantial enough to significantly impact on
customer choice. However scores below 0.98 indicate competitive weakness and scores in the range
1.03 to 1.10 indicate competitive advantage. Greater than 1.10 is considered world class performance.
We have seen businesses and business units struggling to survive at a score of 0.70 or below.
IMPORTANCE OF CVM
CVM is a powerful business tool as it links customers to KPIs by directly measuring the drivers of
purchasing behaviour and the impact these have upon delivering KPIs such as market share, profit and
loss, recommendation, share of wallet, ROI etc. The following two graphs are based upon Customer
Champions’ clients’ data and illustrate the strong relationship between Customer Value Management
and the customer’s willingness to recommend, and the positive impact on increasing the share of wallet
of that customer.