Unit - 3CRM Process

CRM ModelsThere are number of CRM models are developed learn how to manage customers. CRM models are helpful to understand the concept of CRM and regulate the modern concept of CRM.

1.       IDIC Model2.       QCI Model3.       CRM Value Chain Model

1. IDIC MODELThe IDIC model was developed by

Peppers and Rogers. This model suggests that companies should take four actions in order to building, keeping and retaining the long term one-to-one relationships with customers.

  Identify Differentiate (value, need)  Interaction  Customize

2. QCI MODELAt the heart of the model they depict a series

of activities that companies need to perform in order to acquire and retain customers. The model features people performing processes and using technology to assist in those activities.

According to this model, relationships process with external environment. Because when customer wants to start buying process or wants to interact with organization, external environment directly affects the customer experience. External environment also affects the planning process of the organizations.  

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3. CRM VALUE CHAIN MODELCRM, the meaning of those three letters, is

emotionally contested. For some, CRM is simply a bridge between marketing and IT: CRM is therefore an IT-enabled sales and service function. For others it’s little more than precisely targeted 1- to-1 communications. Simply we can say, CRM Is a tool to manage customer relationships with the help of people, information technology, customer’s data, company’s process and customers themselves.

The ultimate purpose of the CRM value chain process is to ensure that the company builds long-term mutually-valued relationships with its strategically-significant customers.

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Primary Stages1.Customer portfolio AnalysisCPA asks the question: ‘who are our SSCs (strategically-significant customers)?’A customer portfolio comprises the

mixture of groups that make up the customer base of a business. For example, Coca-Cola's customer portfolio consists of restaurants, grocery stores, amusement parks and sports arenas.

It means before starting the CRM process, an organization should know about their customers thoroughly.

2. Customer intimacySelecting customers to serve with

your product is one thing and knowing about your customer is another thing.

Some industries are overwhelmed with information, now question is how you will use this data in order to serve best ways to your customers.

Knowing about what, who, why, when and how of customer behavior is most important for a company to manage long term relationships with loyal and strategically-insignificant customers.

3. Develop the networkA company’s network position i.e. its

connectedness to other parties who co-operate in delivering value to the chosen customer, is a source of great competitive advantage.

In order to serve customer’s relationships, it is important for a company to create value for customer on every stage of selling process.

It means company must create a complete network for customers to serve profitably.

A good network may contain suppliers, manufacturers, employees, investors, technology, distributors and retailers.

4. Value proposition DevelopmentBy the fourth step of the CRM value

chain ,now the built network has to work together to create and deliver the chosen value(s) to the selected customers. A customer value proposition is a business or marketing statement that describes why a customer should buy a product or use services.5. Managing the Relationships

All previous steps help the company to create the relationship and start the relationship. Now this is depend on company how a company manage these relationships so that parties, company and customer, get value for the long term.

CRM Process1. Objectives2. Customer segmentation3. Customer database4. Strategy formulation5. Infrastructure development6. Designing system & developing

people7. Customer retention8. Recovering lost customers9. Terminating relationships

1. Objectives of CRM1. Shared customer knowledge

It is important for an organization to check that all resources should share the same information. Shared customer knowledge ensures a high level of customer satisfaction and retention.2. 360 degree customer view

It provides actionable customer insight to the different departments of an organization and helps them to take business decisions accordingly.3. Process Improvement

To facilitate the best practices among all its employees so that they can perform their work effectively.

2. Customer SegmentationCustomer segmentation is the practice of

dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits.

Customer segmentation relies on identifying key differentiators that divide customers into groups that can be targeted, such as a

customers' demographics (age, race, religion, gender, family size, ethnicity, income, education level),

geography (where they live and work), psychographic (social class, lifestyle and

personality characteristics) and behavioral (spending, consumption, usage and desired benefits)

3. Customer DatabaseFirms maintain a record of all their present

and potential customers using customer database. The database stores information like personal details, buying habits, last interaction with the firm, contact information etc.

Such databases help the firms to understand the customers buying pattern which is used to design products and decide on prices. The companies use the available list of potential customers to generate higher sales. Also, such database makes it possible for the firm to provide personalized service to the customers.

4.Strategy formulation

Selecting the CRM Vision

Gaining Organization -

wide commitment

Creating a CRM Project

Team

Analyzing Business Needs

Making a Plan of action.

5.Infrastructure development(Identifying technological requirements)

1. Integration Requirements2. Processing Requirements3. Security Requirements4. Usability Requirements

1. Integration requirementA CRM tool should be able to integrate with the technical infrastructure (software, hardware and networking) of an organization.

Supporting windows 97/XP/98/OSIntegrating with various database application such as oracle and database2

Assimilating with other applications such as ERP.

2.Processing RequirementA CRM tool should be able to serve data processing requirements of an organization and provide meaningful information.

Processing max no. of transactionsSupporting a large volume of data & large no. of users

Marinating a system backupStoring and retrieving data from a data warehouse

3. Security RequirementsA CRM tool should be able to prevent the organization’s data from an unauthorized access

Encrypting the organization’s data

Providing strong user authentication

Providing backup solutions

4. Usability RequirementsIncludes the following requirements of end users

Providing a custom homepage to usersProviding an access to other corporate systems through a common portal

Enabling users to perform screen prints

Providing display graphics and images

6.Designing System & developing peopleThe architecture/design of CRM

facilitates gathering data, storing it, transforming it into information, and presenting the information to users. The system therefore transform data into information.

Data consist of facts and figures that are difficult to use because of their volume.

Information consist of meaningful compilations and summaries of data that tell the users something that he or she did not already know.

Basic CRM ModelData

sourcesData

gathering system

Data warehouse

system

Information delivery

systemInformatio

n users

7. Customer retention1. Provide Exceptional Customer Service2. Use Email Marketing3. Introduce a Loyalty Program4. Create a System for Complaints5. Develop an Outstanding Product or Service

8. Recovering lost customers A study done by Marketing Metrics says you have A 60 to 70 percent chance of successfully selling again to a current customer A 20 to 40 percent chance of winning back an ex-customer A 5 to 20 percent chance of turning a prospect into a customer

1. Decide if you want them back. Not every customer is an ideal customer. If the customer you lost was difficult to work with, then they may not be a good customer to have. The best thing you can do at that point, is to make sure that they are leaving happy and that they will continue to refer you.

2. Find out exactly why they left. If they are a customer that you want back, find out exactly why they left. If they say price then you know there is disconnect between what you offer and the value they perceive. No matter what the reason, ask at least two more probing questions to find out exactly what you could do to improve the offer. You may not get them back, but you will have information that you can use to save a customer who may be thinking of leaving.

3. Adjust your offer. Your lost customer research might uncover some information that you can use to create a new and more profitable offer for your customers. Document your existing offer and the price paid for that offer, then collect other offer and price combinations. You can survey your customers using a trade-off analysis technique called conjoint analysis.

4. Take responsibility. If you made a mistake to lose them ask them what they would need to have to make them stay. That means that you fix what went wrong with no requirement for them to remain as a customer. They may still choose to leave, but if they have a great last experience with you, they may refer you to friends and family who may be a better fit as a customer.

5. Ask for permission to send them industry information. Create a marketing list that is for special prospects and past customers. This list should be used to send information and education on industry topics that they are interested in. There is a system called  Cyrano System that profiles your audience and then delivers information that they are interested in—no heavy sales involved, but keeps you in front of them.

Do an analysis on all the sales that you won and what it was about those customers that got them to choose you over any other alternative. Then dig into your lost customer list and take a look at why those customers left.

Finally, don’t forget to match those lists against the competitive strengths of your organization. Don’t just take customers for the sake of having more customers. Focus on delivering on your brand promise and nurturing your customer experience.

9. Terminating relationshipsThere are a number of strategies for sacking customers:  Raise prices: customers can choose to pay the higher price. If not, they

effectively remove themselves from the customer base. Where price is customized this is a feasible option. When banks introduced transaction fees for unprofitable customers many left in search of a better deal. 

Unbundle the offer: you could take a bundled value proposition, unbundle it, reprise the components and reoffer it to the customer. This makes the value in the offer transparent, and enables customers to make informed choices about whether they want to pay the unbundled price. 

Respecify the product: this involves redesigning the product so that it no longer appeals to the customer(s) you want to sack.

Reorganize sales, marketing and service departments so that they no longer focus on the sackable segments or customers. You would stop running marketing campaigns targeted at these customers, prevent salespeople calling on them and discontinue servicing their queries. 

Introduce ABC class service: you could migrate customers down the service ladder from high quality face-to-face service from account teams, to sales representatives, or even further to contact centre or web-based self-service. This eliminates cost from the relationship and may convert an unprofitable customer into profit. In a B2C context, this equates to shifting customers from a high-cost to a low-cost service channel.

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