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Thesis Report on CRM

GIBM, PUNE Page 2

CERTIFICATE

This is to certify that Mr. / Miss. _____________________________________________

is a student of the Genesis Institute of Business Management, Pune.

He / She in the partial fulfillment of the course has submitted to us a dissertation report

titled __________________________________________________________________ .

This work is original to the best of my knowledge and is therefore being submitted

towards the partial fulfillment of the course.

Dissertation Guide Director

VIVAVOCE RECORD

Roll No. ________________ Date _____________

Internal Examiner External Examiner


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ACKNOWLEDGEMENT

No Project is ever a workof only one person and this one is no exception

This project is the product of many hands, and countless hours from many people. My thanks go

out to all those who helped, whether through their comments, feedback or suggestions.

It gives me immense pleasure to express my deep sense of gratitude to Mr. Rishabha Nayyar

(Faculty guide) for his valuable guidance, constant supervision and above all his continuous

encouragement & support during the tenure of this project.

I also thanks to my other faculty guide Ms. Madhu for their guidance and support during this

project tenure.

Sincere thanks to all the people who have worked under this project. Lastly, no words could

adequately convey my heart full thanks to the family members and friends who indirectly co

operated with us. I could not have done it without you all!

Amit Depani

PGP-2


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GIBM, PUNE Page 4

EXECUTIVE SUMMARY

Customer relationship management (CRM) gained recognition in the mid-1990s, primarily driven

by its perception as information technology (IT). However, not enough attention has been given

to the fundamental drivers of CRM success.

Successful CRM is about competing in the relationship dimensionnot as an alternative to

having a competitive product or reasonable pricebut as a differentiator. If your competitors are

doing the same thing you are (as they generally are), product and price wont give you a long-

term, sustainable competitive advantage. But if you can get an edge based on how customers feel

about your company, its a much stickiersustainablerelationship over the long haul.

The issue is decided to be investigated mainly because the researches regarding CRM systems

focus on general themes. However, there are many specific topics that could be explored

regarding the application of CRM systems. There is need to increase the limited knowledge

regarding the implications and effects of CRM systems in profitability of business. This study

proposes to focus on marketing activities of organizations.

The study could provide a better understanding of CRM and its impact on overall business

activities. From a broader sense, this research could significantly contribute to corporate decision-making whether the application of CRM systems is the best option for the company based on

actual research as primary and secondary.

The research will utilize a descriptive method. As a descriptive research, this dissertation report

will present facts that concern that nature and status of the situation. The study could describe

present conditions, events or systems based on the impressions or reactions of the respondents of

the research as well. The relationships and practices that exist, the beliefs and processes that are

ongoing, the effects that are being felt or the trends that are developing could be also explore in

descriptive researches.


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Table of Contents

1. Certificate2. Acknowledgement3. Executive Summary4. Introduction to Topic5. Conceptual Approach6. CRM and Technology7. The rise of relationship base differentiation8. Loyalty and Bottom line9. Research Measurement10.Statistical analysis11.Hypothesis proven12.Conclusion13.Supportive documents14.Bibliography


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INTRODUCTION TO TOPIC

The customer relationship management (CRM) literature recognizes the long-run value of po-tential and current customers. Increased revenues, profits, and shareholder value are the result

of marketing activities directed toward developing, maintaining, and enhancing successful

companycustomer relationships. These activities require an in-depth understanding of the

underlying sources of value that the firm both derives from customers, as well as delivers to

customers. We built our review from the perspective that customers are the building blocks of

a firm. In order to endure long-term success, the role of marketing in a firm is to contribute to

building strong market assets, including a valuable customer portfolio. CRM is an integral

part of a companys strategy, and its input should be actively considered in decisionsregarding the development of organizational capabilities, the management of value creation,

and the allocation of resources. CRM principles provide a strategic and tactical focus for

identifying and realizing sources of value for the customer and the firm and can guide five

key organizational processes: making strategic choices that foster organizational learning,

creating value for customers and the firm, managing sources of value, investing resources

across functions, organizational units, and channels, and globally optimizing product and

customer portfolios. For each organizational process, we identify some of the challenges

facing marketing scientists and practitioners, and develop an extensive research agenda.

Companies are increasingly focused on managing customer relationships, the customer asset,

or customer equity. Customer relationship management (CRM) explicitly recognizes the

long-run value of potential and current customers, and seeks to increase revenues, profits, and

shareholder value through targeted marketing activities directed toward developing,

maintaining, and enhancing successful company-customer relationships. These activities

require an in-depth understanding of the underlying sources of value the firm both derives

from customers and delivers to them.

The overall aim of this paper is to explore and to investigate the impact of the CRM systems

and its implementation on marketing applications and how it leads to overall profitability of

business. Specifically, this paper will try to reveal the general customer behaviors in

existence. This will also include the exploration on patterns of customer satisfaction,

retention and loyalty.


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GIBM, PUNE Page 7

Conceptual Approach

What is CRM?

Whatever the customer buys for him, every experience should be completely satisfactory,

some delightful. Best CRM strategies should be implemented helping the customers to save

the money, time and heartburn by providing comprehensive customer reviews at a click.

CRM stands for Customer Relationship Management. It is a process or methodology used to

learn more about customers' needs and behaviors in order to develop stronger relationships

with them. There are many technological components to CRM, but thinking about CRM in

primarily technological terms is a mistake. The more useful way to think about CRM is as a

process that will help bring together lots of pieces of information about customers, sales,

marketing effectiveness, responsiveness and market trends.

Dimensions of CRM:

Identifying the customers Acquiring the customers Retaining the customers

Through all these we can achieve good profit.

Foremost thing for better CRM: Getting value out of real time customer information.


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Customer Relations Management (CRM) and Technology

Customer Interfacing Systems:

Bar Coding and Scanners

Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to

calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept

where the consumer pushes the full shopping cart through an electronic gate to the point of

sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All

that the consumer has to do is to pay for the goods. The new developments create an easy

way for users to generate bar codes on demand for asset tracking, compliance labeling,

document tracking, and other business productivity improvements.

RFID (Radio Frequency Identification) is now the buzzword in retail. It is real time tracking

of every single product, from manufacture to checkout and compared to Universal Product

Code (UPC) bar coding, which RFID promises to replace, RFID proactively transmits

information, eliminating the manual point-and-read operations needed with bar coding. This

enhanced visibility could significantly decrease warehouse, distribution, and inventory costs;

increase margins; and enhance customer service.

Internet

Internet is also rapidly evolving as a customer interface, removing the need of a consumer

physically visiting the store.

Operation Support Systems

ERP System

Various ERP vendors have developed retail-specific systems which help in integrating all the

functions from warehousing to distribution, front and back office store systems and


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GIBM, PUNE Page 9

merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting

his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the

customer better.

CRM Systems

The rise of loyalty programs, mail order and the Internet has provided retailers with real

access to consumer data. Data warehousing & mining technologies offers retailers the tool

they need to make sense of their consumer data and apply it to business. This, along with the

various available CRM (Customer Relationship Management) Systems, allows the retailers to

study the purchase behavior of consumers in detail and grow the value of individual

consumers to their businesses.

Advanced Planning and Scheduling Systems

APS systems can provide improved control across the supply chain, all the way from raw

material suppliers right through to the retail shelf. These APS packages complement existing

ERP packages.

Companies are increasingly focused on managing customer relationships, the customer asset,or customer equity. Customer relationship management (CRM) explicitly recognizes the

long-run value of potential and current customers, and seeks to increase revenues, profits, and

shareholder value through targeted marketing activities directed toward developing,

maintaining, and enhancing successful company-customer relationships. These activities

require an in-depth understanding of the underlying sources of value the firm both derives

from customers and delivers to them.

The purpose of this chapter is to describe how companies can effectively cultivate customerrelationships and develop customer portfolios that increase shareholder value in the long run.

We review the extensive literature on customer relationship management, customer asset

management, and customer portfolio management, and summarize key findings.


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Customer relationship management requires the alignment of three building

blocks: insight into customer decision-making, information about customers,

and information-processing capability. However, its emphasis on the latter has

outpaced the first two, so that CRM rarely realizes its full potential. The

guidelines presented here can help managers build a full spectrum information

portfolio for CRM that, through the thoughtful integration of existing tools,

information properties, and communication channels, can provide a more

complete picture of customers and form the basis for long lasting and profitable

relationships with them.

The essence of customer relationship management (CRM) is understanding customer needs

and leveraging that knowledge to improve a companys long-term profitability. When

successfully deployed, CRM can have a dramatic effect on bottom-line performance. In a

span of 18 months, Lowes Home Improvement Warehouse achieved a 265 percent ROI on

its $11 million CRM investment. Virgin Wines achieved a 12 percent customer conversion

rate (the percentage of customer visits to its website that resulted in sales) compared to a 4

percent rate before adopting the program. These examples clearly demonstrate CRMs

potential.

CustomerSatisfaction

CustomerRetention

Customer

Loyalty

Profitability


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The Rise of Relationship-Based Differentiation

CRM is a business strategy to acquire, grow and retain profitable customer relationships, with

the goal of creating a sustainable competitive advantage. Product/price-based differentiation

is waning because of four broad trends: maturing markets, global trade, efficient

manufacturing and the Internet.

Now CRM is emerging as a critical strategy simply because relationships are coming to the

forefront of the competitive battleground. CRM should mean creating mutual wins for

customers and all the company stakeholders, including employees and business partners. Its

just common sense. Would you willingly continue to do business with a company if you

didnt feel you were a winner in the relationship?


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Loyalty and the Bottom Line

Frederick Reichheld, author of The Loyalty Effect and Loyalty Rules, found that loyalty

leaders grow, on average, more than twice as fast as the industry average across a wide

variety of industries. And they do it more cost-effectively. The reason for this so-called

loyalty effect is that loyal customers tend to spend more, cost less to serve and refer others.

The net result is that loyalty leaders are head and shoulders above their competitors in growth

and profitability. Leading examples, according to Reichheld, range from Harley Davidson to

Chickfil- A to Enterprise Rent-A-Car.

The key question: How does a company create loyal relationships? And remember, were

talking about relationships where customers have real choices. Dont include monopolist

industries (as is the case with some utilities or government services) or customers trapped

behind high exitbarriers (such as database software or factory equipment that cant be easily

replaced).

Reichheld and other loyalty experts have studied this issue for years and concluded that loyal

attitudes and behavior are driven by the customers perception of value, which is an

amalgamation of what the customer receives; how its sold, delivered and supported; and how

much it coststhe price or total cost of ownership. Experts in customer psychology say that

customers emotional states influence about 50 percent of the value they perceive. Jim

Barnes, author of Secrets of Customer Relationship Management: Its All About How You

Make Them Feel, sums it up by saying, Value is created every time a customer is made to

feel welcome, important and valued.

To be successful with CRM, you must start by understanding your customers and do the best

job you can of listening to their needs. As Michael Dell said in his book, Direct From Dell:

Strategies That Revolutionized an Industry, If youre constantly getting feedback from

your customers, and youre willing to listen, you can make the most of the opportunities

implicit in those needs.


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RESEARCH DESIGN

This survey was conducted among the customers who are part of one or more CRM or Loyalty or

Reward Program.

Research Objectives:

To study the perception of customers towards the CRM strategies implemented by thedifferent companies or mainly retail stores.

To study the association between the companies and its customers.

THE RESEARCH INSTRUMENT

The research instrument used was developed to measure both the expectations and perceptions of

the customers of different companies or stores. The questionnaire was developed hypothesis was

formulated to reflect the associations between the different companies or Stores and the customer

service offered by them. The main body of the questionnaire included 10 questions reflecting how

customers perceive about loyalty or reward program and relationship with customers. Use was

made of a five-point Likert scale. Structured questionnaires, to measure the respondents

perceptions and expectations, were distributed to the people who are part of one or more loyalty

or reward program.


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SAMPLES:

Sample Size: 20 Sample Frame: Mumbai City Sample Unit: Mumbaikar who are part of CRM program Sampling Method: Simple Random Sampling Constraints: Time, No. of Respondents Survey: Questionnaire

Hypothesis:

CRM helps business to increase its profitability through maintaining long termrelationship with customers.


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Statistical Analysis

Profession:

Business Man Service Self-Employed House Wife4 13 2 1

Are you a part of which companys Loyalty/Reward program?

Life style Shoppers stop D-Mart Planet M Spencers Star Bazaar

4 1 1 3 1 1

Westside Vishal Mart Big Bazaar Crome Reliance Mart3 1 2 1 2

4

13

21

Profession

Business Man

Service

Self-employedHouse wife


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After analysis we can easily identify that premium segment stores like Westside and Lifestyle are

using CRM as its main tool to increase profitability and to nurture long relationship with its

premium customers. Even some customers of these premium stores are not ready to change store

as they become loyal to the brand. Some of the respondents are part of more than one loyalty or

reward program. So I prefer to mention what they told me first preference.

How long you associated with this company?

6 months or fewer 1 year 2 years 3 years or more1 9 7 3

4

1

1

2

31

2

1

3

11

Companies

Life style

Shoppers stop

D-Mart

Reliance Mart

Westside (Tata)

Vishal Retail

Big Bazaar

Spencer's

Planet M


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Most Respondents have long term relationship with their associated companies as more than 1

year. This show that most companies offers customized products to its customers to build long

term relationship with them and get more profits through nurturing relationship with existing

customers.

I am part of this program because it makes me feel closer to the brand.

SA A N D SD

3 17

1

9

7

3

Association

6 months or fewer

1 year

2 years

3 years or more


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Some respondents being part of loyalty or reward program of one or more retail stores strongly

agree that they feel closer to the brand because of this CRM program. And most of other

respondents agree that they feel closer to the brand. In short CRM or loyalty or reward program

helps companies to nurture long relationship with their existing customers.

I am part of this program because I get the best prices / offers from the brand.

SA A N D SD

13 7 0 0 0

3

17

Feel closer to the brand

SA

A

N

D

SD


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Most of the respondents strongly agree with the fact that they become loyal to the brand

because of brand offers best price and best service to them. For every brand in retail setup

it is important to offer something extra to the existing customers for nurturing

relationship with them. Retail store brands like Westside, life style, shoppers stop;

Reliance Mart etc use price benefit to the existing customers as in terms of discounts and

other attractive schemes.

I am part of this program because I feel a sense of commitment towards the brand.

SA A N D SD

6 14 0 0 0

13

7

Best prices/offers from the brand

SA

A

N

D

SD


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Most of the respondents agree with the fact that they become part of one or other loyalty program

because of sense of commitment towards the brand.

The brand cares for me.

SA A N D SD

2 17 1 0 0

6

14

Sense of commitment towards the brand

SA

A

N

D

SD

2

17

1

Brand cares for me

SA

A

N

D

SD


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Most of agree with the fact that if customer participate in one or other loyalty or reward program

so brand support them and cares for them with customized offer and discount to the customers

and profiting through nurturing relationship.

I would like to remain part of this Loyalty/Reward program in future.

SA A N D SD

9 11 0 0 0

Most of the respondents agree with they will remain part of their respective loyalty or reward

program in future also to enjoy the power of relationship with their respective brands and they

remain in contact with the brand.

So in short customers enjoy shopping with their existing companies and also companies enjoying

to get profiting through nurturing relationship with their existing customers.

If competitor offers same product and service so would you like to switch?

Yes No

0 20

9

11

Remain part of this program in future

SA

A

N

D

SD


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Every respondents agree that they will continue with the same brand and will not consider any

other brand if their competitors offer same product or service to them.

So it is clear that it would be very difficult for competitor brand to get existing customers of their

competitor brand. Brand generally give something extra to their existing customers and nurture

existing relationship with their customers and customers also enjoying long term relationship with

brand and get some attractive discounts and offers and best prices.

If in future new competitor enter into market and offers great product and service so would

you like to switch?

Yes No

14 6

20

Same product or service

Yes

No


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Most of the respondents agree with if they will get something better than what they are getting

now with their existing brand so they would like to switch the brand but some of them still have

their long term relationship with their brand so they dont want to change brand anyway they

prefer to shop at the same store only.

So for brand which using CRM as their tool to nurturing existing relationship with their

customers so they should provide something better than what they competitors are offering so its

a best way to maintain long term relationship with their existing customers.

If brand ignore what their competitors are providing new and something better in the market so

they might be loose their customers and also lost their existing long term relationship with their

existing customers.

I would like to purchase other products if company introduce its new product line in future.

SA A N D SD

13 7 0 0 0

14

6

Great product or service

Yes

No


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Most of the customers agree that they would like to purchase new product if their existing brand

offer new product as they add in their new product line.

So it is clear that CRM program or reward or loyalty program help brand in nurturing existing

relationship with their customers and in future if brand launch new product line so they will sell

within existing customers so it will ultimately increase the profitability of the brand.

So in short CRM program helps brand to nurture relationship with brand and brand can profiting

through long term relationship with customers and sell more among the existing customers and

increase in satisfaction on both sides so as it creates win-win situation for both parties.

13

7

Introduce new product line in future

SA

A

N

D

SD


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Hypothesis Proven

As in every thesis or report Hypothesis creation and prove that hypothesis is an important aspect.

Before research we assume something as it might be possible or might not be it is called

hypothesis and its a very crucial part in any thesis presentation.

Hypothesis created before real research work and then we do some research to support created

hypothesis.

In this thesis of CRM I also created one hypothesis as bellow:

CRM helps business to increase its profitability through maintaining long term

relationship with customers.

So to prove this hypothesis I did some primary research and some kind of secondary research to

see if this research result prove the hypothesis or not.

Primary research done by using questionnaire and also we can see analysis of all questions it is

clear that CRM or loyalty or reward program helps businesses to nurture long term relationship

with their existing customers and also according to parato law of 80-20 businesses get more profit

through maintaining long term relationship with their existing customer base.


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Conclusion

In closing we can say that CRM is a new name of marketing as it helps to nurture the relationship

with your existing customers and how to get more revenue for the business by providing

customize solution to our existing customer base and motivate them to buy more and more and

stay in touch with them to get more out of this type of CRM or loyalty or reward program.

Research on managing customer relationships has the potential to provide a unifying framework

for studying diverse marketing issues, and to contribute more broadly to business practice. It also

identifies fruitful new areas for theoretical and methodological advances in addressing organi-

zational challenges at the cultural, strategic, and tactical levels.

This thesis clearly mention and indicate all areas of CRM and how it use by todays businesses to

get more profit by following law of parato80-20 rule.

Also clearly indicate by primary research by questionnaire that customers also feel closer to the

brand and they would like to remain part of this type of loyalty or reward program to get

something better and it also create win-win situation for both the parties as profiting through

nurturing long term relationship.


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Supportive Documents

Questionnaire

Name:-..............................................................................

Profession:-.......................................................................

1. Are you a part of which companys Loyalty/Reward program? ....................................................................................

2. How long you associated with this company?6 months or fewer 1 year 2 years 3 years or more

3. I am part of this program because it makes me feel closer to the brand.Strongly Agree Agree Neutral

Disagree Strongly Disagree

4. I am part of this program because I get the best prices / offers from the brand.Strongly Agree Agree Neutral


5. I am part of this program because I feel a sense of commitment towards the brand.Strongly Agree Agree Neutral


6. The brand cares for me.Strongly Agree Agree Neutral


7. I would like to remain part of this Loyalty/Reward program in future.Strongly Agree Agree Neutral


8. If competitor offers same product and service so would you like to switch?Yes No

9. If in future new competitor enter into market and offers great product and service so would youlike to switch?

Yes No

10. I would like to purchase other products if company introduce its new product line in future.Strongly Agree Agree Neutral


Thank you for your precious time!


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Bibliography

Customer Lifetime Value: Marketing Models and ApplicationsBerger, Paul D, Nada I Nasr.

Managing Customer Relationships - Ruth N. Bolton and Crina O. Tarasi

CRM: Profiting from understanding customer needs - Anne Stringfellow, Winter Nie

WWW.GOOGLE.COM

WWW.CRMGURU.COM
http://www.google.com/http://www.google.com/http://www.crmguru.com/http://www.crmguru.com/http://www.crmguru.com/http://www.google.com/

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