CRM is a competitive strategy and process of acquiring, reacting and partnering with selective customers to create superior value for the company and the customer.

1. CUSTOMER RELATIONSHIP
MANAGEMENT
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2. Definition
• CRM is a competitive strategy and process of
acquiring, reacting and partnering with
selective customers to create superior value for
the company and the customer.
- Parvatiyar and sheth
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3. Why is CRM important ?
• Competition
• Consumer expectation
• Technology
• Diminishing impact of advertising
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4. Scope of CRM
• Build long term and profitable relationship
with chosen customers.
• Getting closer to the customers at every point
of contact with them.
• By fostering customer's loyalty, the company
spends less time acquiring new customers and
saves then time on other projects.
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5.  Piece of software solution.
 Sales tactics
 Call center services
Another buzzword like ERP /
BUSINESS PROCESS
MANAGEMENT.
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6. Amul
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7. Relationship Orientation
• A relationship is composed of a series of
interactive episodes between dyadic parties over
time.
– Making a purchase
– Enquiring about a product
– Making a sales call
– Negotiating terms
– Dealing with complaints
• Independence to Dependence to Interdependence
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8. Change within relationship
• Awareness
• Exploration
• Expansion
• Commitment
• Dissolution
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9. Exploration
• Attraction
• Communication and bargaining
• Development and exercise of power
• Development of norms
• Development of expectation
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10. Trust
• Calculus-based trust
• Knowledge-based trust
• Identification based trust
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11. Commitment
• Trust, Shared values and belief
• Trustworthy partners
• Size of investment
Negatives
• Opportunism
• High termination cost
• Search cost and learning cost
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12. Transaction Vs Relationship
• Transaction: Trade of values between parties.
– Monetary
– Non-Monetary
• Relationship orientation: Treating customers in
an individualized way.
– Long term
– Mutually beneficial
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13. Exchange map
1. Good quality, durable planes
2. Fair price
3. On-time delivery
4. Good financing terms
5. Prompt service and availability of spares
Boeing FedEx
1. Good price
2. Timely payment
3. Good Word Of Mouth
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14. Transaction Vs. Relationship Marketing
Transaction
• One off exchanges
• Brand management
• Short-term focus
• Mass communication
• Isolated market research
• Market share
• Profitabilty
• Brand equity
Relationship
• Ongoing exchange
• Customer management
• Long-term focus
• Personal communication
• Ongoing dialogue
• Mind share
• Lifetime value of customer
• Customer equity
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15. Why companies want relationship
with customers?
• Reduce marketing cost
• Better customer insight
• Lifetime value: Present day value of all net
margins earned from a relationship with a
customer, customer segments or group of
customers.
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16. The customer journey
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17. Why companies do not want relationship
with customers?
• Loss of control
• Exit cost
• Resource commitment
• Opportunity cost
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18. Why customers want relationship with
suppliers?
• B2B Context
– Product complexity
– Product strategic significance
– Service requirement
– Financial risk
• B2C Context
– Recognition
– Personalization
– Status and affiliation
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19. Why customers do NOT want
relationships with suppliers?
• Fear of dependency
• Lack of perceived value in the relationship
• Lack of confidence in the supplier
• Customer lacks relational orientation
• Rapid technological changes
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20. Customer satisfaction, loyalty & business
performance
• CRM aims to improve the Business
performance by enhancing Customer
Satisfaction and driving up Customer Loyalty.
Customer’s Need and expectation 
Identification & fulfilment  Satisfied customer
 Repurchase  Business Process increases.
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21. … continued
• Satisfaction Profit Chain
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22. Customer satisfaction
• Customer Satisfaction is the customer’s
fulfilment response to a customer experience
or some part thereof.
• Satisfaction is measured by comparing the
customer experience with the customer
expectations.
• This is called Expectation – disconfirmation
model of Customer Satisfaction.
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23. … continued
Expectation – disconfirmation model
• If experience meet expectation then customers are
Satisfied.
• Experience > expectation = Positive
disconfirmation.
• Experience < expectation = Negative
disconfirmation.
• At times experience meets expectation but still
unsatisfied because of low expectation.
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24. Customer loyalty
• Loyalty can be defined and measured by two
major approach.
– Behavioural loyalty.
– Attitudinal loyalty.
• Behavioural loyalty is measured by reference
to customer purchase behaviour and loyalty is
expressed in continued buying.
• Many companies use RFM measures of
Behavioural variables.
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25. … continued
R – Recency of purchase (time since last
purchase)
F – Frequency of purchases (No. of purchase in a
given period)
M – Monetary value of purchase.
• Attitudinal loyalty is measured with reference
to Belief, Feeling and purchasing intention
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26. … continued
• Two dimensional model of customer loyalty
Based on Relative attitude & Repeat purchase
behaviour.
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27. Business performance
• Measured in two ways
– Quarterly profit(or) Earnings/share
– Balanced score card(leading companies)
• Four Key performance Indicator(KPI)
– Financial
– Customer
– Process
– learning & growth
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28. … continued
• Implied Connection B/w Indicators is
People(learning & Growth) do things (process) for
customers(Customer) that have affects on business
performance(Financial).
• Drivers of Business performance:
– Customer outcomes of satisfaction
– Loyalty
• Share of customer is the popular measure of CRM.
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