Customer Relationship Management

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Productivity & Quality Tools

Customer Relationship
Management

Prof. Melvin V. Moraga

Learning Objectives
• Know what CRM is and its history.
• Understand the importance of CRM.
• Be aware of the potential benefits and costs
of CRM.
• Discuss the three phases of CRM.
• Understand the four tasks to creating and
developing CRM.
• List the advantages and disadvantages of
CRM.

History of CRM

B&S

RM

CIMS

CRM

e-CRM

Time line
Late 80’s

Early 90’s

Mid 90’s

2002 - Future

B&S – Buying & Selling
RM – Relationship Marketing
CIMS – Customer Information Management Systems
CRM – Customer Relationship Management
e-CRM- A subset of CRM that focuses on enabling customer
interactions via e-channels (The web, email and wireless)

Definitions
• “is a business strategy with outcomes
– that optimise profitability, revenue and
customer satisfaction
– by organizing around customer segments,
– fostering customer-satisfying behaviors and
– implementing customer-centric processes.”
• “is a strategy
– used to learn more about customers' needs
and behaviors
– in order to develop stronger relationships
with them.”

Underpinning Theory
• Customers have many points of contact
with an organisation
• Retaining customers is far most cost
effective than recruiting new ones
• Some customers are more profitable than
others
– The “80/20” rule
– For most firms, 80 percent of profit comes
from 20 percent of customers

• Use of Technology

Importance of CRM to GM‟s
 CRM can….







Increase customer service levels
Improve efficiency of call centers
Cross-sell products more effectively
Help sales staff close deals quickly
Simplify marketing processes
Increase ROI
6

Customer Relationship Management Systems

11-7

Customer Relationship Management
• CRM enables an organization to:
– Provide better customer service
– Make call centers more efficient
– Help sales staff close deals faster
– Simplify marketing and sales processes
– Discover new customers
– Increase customer revenues

11-8

CRM Infrastructure

Call Center

Web
Access

E-mail

Store

Direct
Sales

Fax

Refined Business Processes

Process
Improvement

Business Intelligence

Integrated database

Billing

Call center

Fig. 2

Accounts
Sales
….

Dyche, J., The CRM Guide to Customer Relationship Management, Addison-Wesley, Boston, 2002

9

Potential Benefits Of CRM

• Customer retention
• Share of customer or share of
wallet
• Cross-selling
• Up-selling

Potential Costs Of CRM

• IT infrastructure
• Process change

Benefits Of CRM For Customers

• Continuity
• A contact point
• Personalization

Three phases of CRM

• Acquiring New Relationships
– You acquire new customers by promoting your
company‟s product and service leadership.

• Enhancing Existing Relationships
– You enhance the relationship by encouraging
excellence in cross-selling and up-selling,
thereby deepening and broadening the
relationship.

• Retaining Customer Relationships
– Retention focuses on service adaptability –
delivering not what the market wants but what
customers want.

Retention vs. Acquisition
Retention of customers gives greater benefit over
acquisition of new customers
•Builds trust and loyalty
•Up-sell and cross sell opportunities

Move customers through the lifecycle
Acquisition, Growth and Retention
Movement will maximize their value and increase
profits

Studies indicate that increasing the number of
customers a company retains each year by just 5%
can increase contribution to shareholder value by
40% to 95%
14

Retention vs. Acquisition
 Average U.S. companies
lose 20% of customers
every year – not knowing
why
 Costs 6 to 7 times more to
attain a new customer than
to retain current customers

15

Steps to improve CRM

1. Build a database
2. Analyse, define types,
profitability...
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