ncept and Context

B2B and CRM

Co of

Ranjan SS

The Evolution of CRM►The concept of marketing has changed over the years► In sense it is a revolution►Due to ever changing taste of the customer the overall concept

of marketing has changed in terms of,

◙ Customer Identification◙ Customer Retention◙ Customer Satisfaction►The marketing concept has been evolved from the various

earlier orientations►The emphasis has been further shifted to business

realization.

Production Orientation

When a high demand for a product or service exists, coupled with a good certainty that consumer tastes do not rapidly alter

Product Orientation

It is concerned with the product quality. As long as the product is of high standard, people would buy and consume.

Selling Orientation

It focuses primarily on the selling and promotion of a particular product, and not determining new consumer desires.

Such an orientation may suit scenarios in which a firm holds dead stock, or sells a product that is in high demand, with little chance of change in consumer taste to reduce demand.

Marketing Orientation

It involves a firm essentially base its marketing plans around the marketing concept, and thus supplying products to suit new consumer tastes.

► The 1990s brought two new concepts that challengedthe business landscape : Deregulation and the Internet.

► The explosion in information allowed consumers tocompare features, and prices across multiple providers.

► Companies started trying to manage relationshipswith their customers, partners, and suppliers in apersonalized and automated manner.

What are CRM ?Customer Relationship Management

► It is the most effective corporate business mantra.

►CRM “is a business strategy that aims to understand,anticipate and manage the needs of an organization's currentand potential customers”

►In sense, the business between buyer and seller isconsidered as a platform for building relationships.

►It is a comprehensive approach which provides seamlessintegration of every area of business that touches thecustomer - namely marketing, sales, customer services and field support through the integration of people, process and technology.

► CRM is a shift from traditional marketing as it focuses on

the

retention of customers in addition to the acquisition of newcustomers

Objectives of CRM► Lifetime Value

– Refers to the net present value of the potentialrevenue stream for any particular customer overnumber of years

– Starts with current purchase activity then extrapolatesto include potential additions from cross-selling,upgrades, total ownership, etc.

► Customer Ownership– Attempts to “own” the lion share of customer

spending and/or “share of mind” in a particular product category

– Building brand equity, maintaining vigilant customercontact, keeping current with the market trends iscritical

– 5% points increase in customer retention causessome 25% increase in profit ratio

► CustomerizationMass Customization – Using flexible processes andorganizational structures to produce varied andindividualized products and services at the price of standard mass-produced offerings.

Personalization – Customization of some features ofa product or services so that the customer enjoysmore convenience, lower costs, or some other benefit. Segment-of-One Marketing – Based on the idea of the firm learning individual reactions to marketingstrategies, then treating this customer differently than other customers.

Customerization = Mass customization+ personalization + segment-of-one,dependent on a web-based electronic interaction

Distinction betweenMass Marketing & Customerization

Mass Marketing CustomerizationRelationship with thecustomers

Customer is inactiveparticipant in process

Customer is active co-producer

Customer needs Researched and expressed

May not be expressed

Product and serviceofferings

Marketing and R&Ddrive offering

Customized based oncustomer interactions

Price Fixed prices with discounting

Value based pricing;customer determined

Communication Advertising and PR Integrated andinteractive

Distribution Combination of direct and indirect

Direct and generally online

Why CRM ?♦ To built a long term relationship that enriches a

company trust, which in turn ensures steady flow of business.

♦ The focus of CRM is on creating value for the customerand the company over the longer and lasting term.

♦ Retaining existing customer is as difficult as winning andgaining new ones.

♦ CRM enables organisations to gain „competitive advantage‟

over competitors that supply similar products or services.♦ This depends on product quality and moreover the quality

of relationship maintained by them.♦ Constant changing of customer buying behaviour.♦ When customers value the customer service that they

receive from suppliers, they are less likely to look to

alternative suppliers for their needs.♦ To establish cross selling avenues.

Importance of CRM► It uses web based technologies to focus on the lifetime value

ofa customer.► It reduces costs, because the right things are being done

(i.e.,effective and efficient operation)

►The challenge is to continue attracting new and profitablecustomers even as forming ever tighter bonds with existingones and optimizing on these relationships over their lifetimes.►To analyze customer needs and serve them effectively

throughsystematic, real time information handling and timely response.► It helps in increasing customer satisfaction, because they

aregetting exactly what they want.

► It provides maximisation of opportunities (e.g. increased

services, referrals, etc.)► It increases access to a source of market and competitor

information.► It is for operational long term profitability and sustainability

ofthe organization.

What CRM can do ?• To establish an on-going dialogue with

customers by using the web to communicatewith them directly.

• To gain a better understanding of yourcustomers‟ needs and build individual customersolutions.

• To produce more efficient marketing efforts byusing readily accessible customer information.

• To link all departments, giving them access tothe same information – updated in real time.

• To speak to your customers in a consistent

voice across your organization.

Advantages of good CRM• Faster response time to the client.• Uniform talking and pattern.• Unified information without misleading.• Increased Efficiency.• Recognize your customer and their need.• Deeper knowledge about your customer.• Increase sales and marketing opportunities.• Ability to manage marketing campaign with

clear objectives.• To boost in customer satisfaction and

responsiveness.

A discussion : Is CRM a new concept?

N o !• Simply an extension

of relationshipmarketing

• Builds on customerservice andsatisfaction concepts

• Just the latestbuzzword for creatingcustomer orientation

• Bottom-line is still thesame

Yes!• A shift in corporate

philosophy concerning theapproach to value delivery

• Customer - centricapproach to value chain

• New and technology -enhanced processes

• Focus is not just onbottom-line, but on top-line

• Goal is to create satisfyingexperiences across allcustomer contact points

Market Research & CRMIt can give feedback in areas of.

● Customer satisfaction level with the organization in

generalmore specifically with its technology, quality, service,performance, time and price.

● It guides in further enhancement in customer satisfaction.

● In creating data bank of the competitors and benchmarkthem as per customer feedback.

● In knowledge of the market share and its possible trend.

● Reasons for poor profitability and necessary correctivemeasures.

● In identification of reasons for typical customerspreferences.

● In organization‟s SWOT investigation.

● Possible business solutions to various problems.

The challenges of personalizedEnterprise E-Support

► Relevant information about prospect orcustomer

► Information Updates

► Publishing of information

► Personalized Applications

► Communication

► Security

► Scalability

► Deployment

Determinants of CRM

Trust

The readiness to rely on the ability, reliability, eagerness and motivation of one company to serve the needs of the other company or the customer as per the agreement completely and clearly.

Value

The ability of a one organisation to the other organization or towards the customer to satisfy the needs at a comparatively lower cost or higher benefit than that offered by competitors and measured in money, timely, function and in psychological terms.

Determinants of CRM

In addition to t r u s t and v a lu e , the organization

must: Understand customer needs and

problems. Meet their commitments.

Provide superior after sales support.

Make sure that the customer is always told the truth(must be honest). and

Have a passionate interest in establishing and retaining a long-term relationship (e.g., have long-term perspective).

Stages in the development of aCustomer Relationship

The Pre-relationship Stage

The event that triggers an organization to seek a customer support.

The Early Stage

Experience is accumulated between the organization and the customer although a great degree of uncertainty and distance.

The Development Stage

Increased levels of transactions lead to a higher degree ofcommitment and the distance is reduced to a social exchange.

The Long-term Stage

Characterised by the organization and the customer mutualimportance to each other.

The Final Stage

The interaction between the organization and the customer becomes a bond (Loyalty).

Stages in the Development of aKey-Account Relationship

HighSynergistic KAM

Partnership

D e gr e e o f i n vo l vem e nt Mid-KAM

Early-KAM

Low Pre-KAM

Transactional Collaborative

N a ture of cust o mer re l ati o ns h ip

A Relationship Life Cycle Model

High cooperationLow competition

Low cooperationHigh competition

Pre- relationship

stage

Developmentstage

Maturitystage

Decline stage

Time

The role of salespeople / organization asRelationship Builders and Promoters

In identification of potential customers and their needs.In approach to key decision makers in the customerclass.In negotiation and advancement of dialogue and mutual trust with the prospects and the customers. In the coordination and cooperation between the customers and their influencers.In encouraging the customer learning process.In the contribution to construction of resolution of existing conflicts.ln creation of the customer relationship development team.

Functions of Customer Relationship Management

Value Creation Process

Management Decision Process

CustomerSensitivity•Diversity•Information•Differentiated

offering

Technology delivery process•R&D•Technology integration•Efficiency, effectiveness

learning

Product delivery process•Concept to launch•Manufacturing process

Customer delivery process•Supply chain•Distribution•Infomediation (distribution

of information)

Value-basedStrategies•Pricing•Communication

Types of CRM Programs Analytical CRM

– Customer Segmentation

– Trend Analysis

Operational CRM– Campaign Management

– Tele-Marketing / Tele-Sales

– Activity and Time Management

– Quotation and Order Processing

– Delivery and Order Fulfillment

– Customer Service and Support

– Remote Access

Collaborative CRM– Enterprise Portals

– Customer Access

– Supplier Access

– Personalization

Areas of CRM Activity Sales Force Automation (SFA)

Customer Service and Support (CSS)

Help Desk

Field Service

Marketing Automation

Areas of CRM ActivitySales Force Automation

It involves 35-40% of all CRMactivity

It manages lead generation forthe organization

It tracks movement of leadsthrough the pipeline

It allows better usage of customer data

It integrates activities across sales channels

It simplifies the relationship management process

It simplifies forecasting of the opportunities (SWOT)

Areas of CRM ActivityCustomer Service and Support (CSS) It involves 20-25% of CRM activities.

It involves putting system in

place to maximize customer

satisfaction and thus support

It is for assigning, catering,

and tracking of trouble pockets

It inquiries and attempt solutions

through resolution

It provides information to support

customer call center activity

It accommodates the role of receptionist, sales staff and other in customer facing roles

Areas of CRM ActivityHelp Desk

It incorporates some 15-20% of all CRM activities.

It is the central area for end user support.

It involves Information Technology support functionand thus can be challenging,

frustrating, as well as exciting

It allows individuals to access

network database for problem

solving and to find customer

relevant information

It can be internal or external

It offers many bottom-line savings

Areas of CRM ActivityField Service It involves 3-5% of all CRM activities It attempt to optimize processes and information needed by

companies who send technicians or staff into the field service It incorporates mobile service techniques to log information

about work orders and service and to access information fromthe remote site.

It works on feeding information about customer problems and salesperson leads through Sales Force Automation

It requires market information and intelligence which needs to be gathered and logged into central database.

It involves a combination of CRM applications such as , work order management, dispatch, wireless technology, and

Areas of CRM Activityhistorical customer service data

Areas of CRM ActivityMarketing Automation It also involves 3-5% of organizational CRM activities. It refers to automation of that

marketing processes which Includes customer segmentation, customer data integration (CDI), and campaign management.

It interfaces with data ware-houses and data mining activitiesto tailor products and promotions sothat the right offer goes to the right person at the right time.

It must interact with SFA to support field sales efforts It needs to provide customized customer interactions

critical to segment of one marketing, mass customization,

Areas of CRM Activitycustomerization, etc.

Commercial E - Communities Goal is to create an environment where people get

meaningful interactions with the company and other users so that they feel part ofthe enterprise.

Adds human component and engages customers.

Creates more stickiness andownership

Components of Commercial E-Communities Customer-focused transactions

Community Interactions

Access to Relevant Information

Value-added Services Based on Customer Data

Models of Customer Relationship Management

The Evans and Luskin model for effectiveRelationship Marketing

Relationship marketing inputs•Understanding customer expectations•Building service partnerships•Empowering employees•Total quality management Relationship marketing outcomes

•Customer Satisfaction•Customer loyalty•Quality products•Increased profitability

Assessment state•Customer feedback•Integration

The Brock and Barcklay model of selling partner relationship effectiveness

Independence

Mutual trust

Cooperation

Selling partner relationship effectiveness

Relative influence

Managing Customer RelationshipsThe global organization must be involved in the following activities in order to initiate, develop and enhance the process that is aimed at building trust and commitment with the customer.

Ini tiating the relationshi p

Engage in strategic prospecting and qualifying;

Gather and study pre-call information;

Identify buying influences;

Plan the initial sales call;

Demonstrate an understanding of the customer‟s needs;

Identify opportunities to build a relationship; and

Illustrate the value of a relationship with the customer

Managing Customer Relationships

Deve loping the re lat ionship

Select an appropriate offering;

Customise the relationship;

Link the solutions with the customer‟s needs;

Discuss customer concerns;

Summarize the solution to confirm benefits; and

Managing Customer RelationshipsSecure commitment.

Managing Customer Relationships

Enhancing the relationship

Assess customer satisfaction;

Take action to ensure satisfaction;

Maintain open, two-way communication; and

Work to add value and enhance mutual opportunities.

Use a non customized approach

Build a strong and lasting relationship

Seek better opportunities

elsewhere

Focus on loyalty-building

program

Managing Customer RelationshipsQualifying prospects for relationship building

High

Opportunities for adding value

Low

Low HighPotential profitability of customer

Relati onship netw orks

The ultimate outcome of a successful CRM strategy is thecreation of a unique company asset known as a relationshipnetwork.

A relationship network consists of the company and its major customers with whom the company has established long and enduring business relationships.

The additional aspects of a global salesperson‟s job are to:

Manage customer value;Act as customer advocate; andEnhance customer loyalty and build a “health” and

profitable network of relationships.

SummaryCRM is a new business philosophy based on trustand value;The core function of CRM is the value creation process;Customer relationships develop over time;The role of global salespeople in the process is that of both relationship builders and relationship promoters; andThe basic premise of CRM is to offer superior value to customers in an effort to turn prospects into customers,customers into loyal customers, andloyal customers into partners.