CUSTOMER ORIENTATION

“ THE ONLY VALUE YOUR COMPANY WILL EVER CREATE IS THE VALUE THAT COMES FROM THE CUSTOMERS----THE ONE’S YOU HAVE NOW ,THE ONES YOU WILL HAVE IN FUTURE.BUSINESSES SUCCEED BY GETTING,KEEPING AND GROWING CUSTOMERS.CUSTOMERS ARE THE ONLY REASON YOU BUILD FACTORIES,HIRE EMPLOYEES, SCHEDULE MEETINGS, LAY FIBER OPTIC CABLES or ENGAGE IN ANY BUSINESS ACTIVITY.WITHOUT CUSTOMER’s YOU DON’T HAVE A BUSINESS.” – Philip Kotler

Product Product centric centric

marketingmarketing

Segment Segment centric centric

marketingmarketing

Customer Customer centric centric

marketingmarketing

Marketing Practice

Time

1960 1980’s 1990’s

EVOLUTION

WHY CRMWHY CRMWHY CRMWHY CRM

• It is 5 times MORE costly to generate a new Customer than Retaining a CUSTOMER

• To build a Long term Business by attracting , Maintaining and Growing customers

Traditional Organisation

Chart

C U

S T

O M

E R

C U

S T O

M E

R

CustomerCustomer

Frontline people

Middle Mgmt.

Top Mgmt.

CustomerCustomer

Frontline people

Middle Mgmt.

Top Mgmt.

Modern Customer Centric Organisation

Chart

Transaction vs. Relationship MarketingTRANSACTION MARKETING RELATIONSHIP MARKETING

Focus on Single Sale Focus on Repeat Purchase or reference

Orientation of Product features

Orientation of Product benefits

Little emphasis on cust.service Highest emphasis on customer service

Moderate customer contact High customer contact

Short Time scale Long time scale

Quality is concept of production

Quality is for all

WHAT IS CRM

CRM is the process of carefully managing detailed information about individual customers and as a group and all “customer Touch points “to maximum customer loyalty.

• CUSTOMER KNOWLEDGE• RELATIONSHIP STRATEGY• COMMUNICATION• MAXIMIZE CUSTOMERS VALUE PROPOSITION

CUSTOMER’s PERCIEVED VALUE

• THE DIFFERENCE BETWEEN TOTAL BENEFITS AND TOTAL COST

CPV = “What I Get” – “What I give”

TOTAL BENEFIT TOTAL BENEFIT • PRODUCT BENEFITPRODUCT BENEFIT• SERVICE BENEFITSSERVICE BENEFITS

• PERSONNEL BENEFITSPERSONNEL BENEFITS• IMAGE BENEFITSIMAGE BENEFITS

TOTAL COST • MONETARY COST

• TIME COST• ENERGY COST

• PSYCHOLOGICAL COST

CUSTOMER’s LIFE TIME VALUE CUSTOMER’s LIFE TIME VALUE

• A PROFITABLE CUSTOMER IS A PERSON , HOUSEHOLD , BUSINESS BUYER, THAT OVERTIME YIELDS A REVENUE STREAM THAT EXCEEDS BY AN ACCEPTABLE AMOUNT THE COMPANY’s COST STREAM FOR ATTRACTING , SELLING AND SERVICING THAT CUSTOMER

• ACTIVITY BASED ACCOUNTING (ABC) WHERE A COMPANY CALCULATES ALL REVENUE COMING FROM A CUSTOMER IN A FORSEEABLE PERIOD MINUS TOTAL COST INCURRED TO SERVICE THAT CUSTOMER FOR THE SAME PERIOD.THIS IS THE METHOD OF CLV.

PLATINUM CUSTOMERSPLATINUM CUSTOMERS

GOLD CUSTOMERSGOLD CUSTOMERS

IRON CUSTOMERSIRON CUSTOMERS

LEAD CUSTOMERSLEAD CUSTOMERS

PROFITABILITY OF CUSTOMERSPROFITABILITY OF CUSTOMERS

CUSTOMER PYRAMID

5% 5%

15%15%

80 % 80 %

65%65%

15%15%

20%20%

NUMBER (%) SALES or Profit share (%)

TEAM BASED

SINGLE ACCOUNT MANAGER

PERSONAL SELLING, MASS COMMUNICATION,INTERMEDIARIES

HOW TO IMPLEMENT CRM

• PEOPLE• COMMUNICATION • SYSTEMS

QUALITY INTERNAL SERVICE

Employee satisfaction

Employee Retention

Employee Productivity

Value External service

Customer Satisfactio

n

Customer Loyalty

Growth Turnover

Profitability

Source: Harvard Business Review,1994

> Open> Empathetic> Committed> Genuine> Competent> Good Listeners

PEOPLE SHOULD BE

COMMUNICATION

INTERNAL COMMUNICATION:

FROM MANAGEMENT TO ALL EMPLOYEES

EXTERNAL COMMUNICATION:

WITH CUSTOMERS

COMMUNICATION MUST BE OPEN MUTUALLY AGREED UPON SOLUTION ORIENTED POSITIVE AVOIDING BLAME GAME

SYSTEMS

• IT SPPORT SYSTEMS• PERFORMANCE TRACKING SYSTEM• REWARD SYSTEM FOR EMPLOYEES AND

CUSTOMERS• TRAINING

CUSTOMER RELATIONSHIP PROGRAMMES

APPLICATION OF IT in CRM

• DATA STORAGE• DATA ANALYSIS• DATA WAREHOUSING• DATA MINING

IT has been extensively used in

• Market Segmentation and Selection

• Customer analysis

• Relationship analysis

• Customer profitability analysis