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Customer Focus
Customer Focus was identified as the single most
important differentiator between the best and the
worst companies in an industry in a survey of 100+
senior executives.
                                    (Schmitt, 2003)




                   (c) Kalpana Chauhan
Customer Relationship Management

CRM is a management approach that involves identifying,
attracting, developing and maintaining successful customer
relation over time in order to increase retention of profitable
customers.        (Bradshaw and Brash 2001, Massey et al 2002)

Requires alignment of business strategy, organization (relational)
structure and processes, customer knowledge and technology in
such a manner, that all customer interactions can be organized to
the unique positive customer experience resulting value for the
organization. At its highest use, it is a competitive strategy.


                         (c) Kalpana Chauhan
CRM Focus
0 Strategic marketing related processes and capabilities.
                                      (Day 1994,99,2000, 2003)
0 KM and interaction process                 (Zablah et al, 2004)
0 Customer loyalty, profitability, acquisition ,retention
  (Kumar & Shah, 1999; Reinartz & Kumar, 2003; Venkatesan,
  Dick & Basu, 2003; Stauss et al, 2004)
0 Organizational culture, focused on creating quality
  (profitable) relationships
                     (Ngai, 2005; Romano & Fjermestad, 2003)
0 A technology providing integrated view of customers
                           (Zikmund, McLeod, & Gilbert, 2003)

                         (c) Kalpana Chauhan
CRM as Differentiation Strategy

0 Strategy is based on a differentiated customer value
 proposition. Satisfying customers is the source of
 sustainable value creation.
                                           (Kaplan, 2004)
0 The value paradigm requires integration and real time
 optimization of the value chain between the customer,
 the firm and its extended enterprise.     (Chan, 2005)




                     (c) Kalpana Chauhan
Proposed Conceptualization

0 CRM   as differentiation strategy could       be
 conceptualized in terms of three components:
 0 Customer Experience as a driver
 0 Customer Centricity as a design
 0 Relationship Management as a process




                     (c) Kalpana Chauhan
Customer Experience Facts
0 86% of consumers quit doing business with companies because
 of a bad customer experience.
                           (Harris Interactive, CEI Report, 2010)

0 It takes 12 positive service experience to make up for one
 negative experience.                            (Ruby Newell-Legner)

0 80% of the firms like to use customer experience as a form of
 differentiator. (Forrester: State of customer experience 2010)



                           (c) Kalpana Chauhan
Customer Experience
At this very moment, it is happening. Across channels and touch points,
customers are experiencing every company. Whether interacting on the
Web, through a call center, on the phone, by way of e-mail or face-to-face,
customers are experientially assessing the extent to which a company
values their patronage. Those experiences are collectively serving to
strengthen relationships—or, if the company is failing to fulfill its brand
promise and to delight customers, are instead weakening the bond between
its customers and its business.                     (Peppers and Rogers 2009)



                              (c) Kalpana Chauhan
Literature
Focus has been mainly on service quality and measuring customer
satisfaction
Consumption’s experiential aspects (Holbrook and Hirschmann 1982)
Experience Economy (Pine and Gilmore 1999)
experiential marketing, Customer Experience (Schmitt 1999, 2003)
 Meaning, creation strategy Meyers and Schwager, 2007, Verhoef
2007
Atmosphere Baker et al. (2002); Kaltcheva and Weitz (2006);
Wakefield and Baker (1998)
Price Baker et al. (2002); Dorotic, Verhoef, and Bijmolt (2008);
Gauri, Sudhir and Talukdar (2008); Noble and Phillips (2004);
Assortment Baker et al. (2002); Broniarczyk, Hoyer and McAllister
(1998); Huffman and Kahn (1998); Janakiraman, Meyer, and Morales
(2006)
Channel Neslin et al. (2006); Patricio, Fisk, and Falcao e Cunha
(2008); Sousa and Voss (2006); Verhoef, Neslin, and Vroomen (2007)
                        (c) Kalpana Chauhan
What is Customer Experience Management?
 Customer’s interpretation of his or her total interaction with the brand
                                                                    (Ghose 2007)

 As such, a service provider cannot avoid creating an experience every time it
 interacts with a customer                            (Thompson and Kolsky 2004)

 The process of strategically managing a customer's entire experience with a
 product or company                                               (Schmitt 2003)

 All interactions involved throughout the process and throughout the customer
 lifecycle culminate in a positive customer experience if customers go away
 feeling that their personal needs were met and they were treated with care.


                                (c) Kalpana Chauhan
What is Customer Experience Management?


0 Customer experience is the internal and subjective
 response customers have to any direct or indirect contact
 with a company.              (Meyer & Schwager, 2007)

   -Direct contact: generally occurs in the course of purchase,
use, and service and is usually initiated by the customer.
   -Indirect contact: most often involves unplanned
encounters with representations of a company’s products,
services, or brands and takes the form of word-of-mouth
recommendations or criticisms, advertising, news reports,
reviews, and so forth.

                         (c) Kalpana Chauhan
Customer Experience

0 Requires Outside-in approach
0 Can be seen from the traditional information-
 processing and decision oriented perspective and the
 experiential perspective.




                    (c) Kalpana Chauhan
Customer Centricity as Design

 0 Amongst all CRM failure only 6% are due to
  technology, remaining are due to failure to change
  behavior, culture or organizational structure.
                                          (Richard 2008)




                    (c) Kalpana Chauhan
Customer Centricity
0 ‘Putting customer as the center of business and activities’.

0 It refers to the orientation of a company to the needs and
 behaviors of its customers, rather than internal drivers (such
 as the quest for short term profit).
0 Requires alignment of operating model behind a carefully
 defined customer segmentation strategy and tailor business
 streams- product development, demand generation, customer
 care, supply chain etc.
                                            (Gummesson 2008)

                           (c) Kalpana Chauhan
Dimensions of Customer Centric Organization
       Dimensions      Customer centric organization
Basic philosophy       Serve customers: all decisions start with the
                       customer and opportunities for advantage
Business orientation   Relationship-oriented
Product positioning    Customer segment centers, customer relationship
                       managers, customer segment sales team, e.g. high
                       net worth
Organizational         Highlight product benefits in terms of meeting
structure              individual customer needs
Organizational Focus   Externally    focused,    customer    relationship
                       development, profitability through customer
                       loyalty, employees are customer advocates
Performance metrics    Share of customer wallet, customer satisfaction,
                       customer lifetime value, customer equity
Management criteria    Portfolio of customers
Selling approach       How many products can we sell to this customer?
                       How do we co-create value?
Customer Knowledge     Customer knowledge creates a valuable asset
                          (c) Kalpana Chauhan
                                                         Shah et al 2006
Customer Centricity
1.Solve the customer’s problem completely by ensuring
  that all the goods and services work, and work
  together.
2. Don’t waste the customer’s time.
3. Provide exactly what the customer wants.
4. Provide what’s wanted exactly where it’s wanted.
5. Provide what’s wanted where it’s wanted exactly
  when it’s wanted.
6. Continually aggregate solutions to reduce the
  customer’s time and hassle.
                             (Womack and Daniel 2005)

                    (c) Kalpana Chauhan
Relationship Management as Process
What is RM process?
0 Customer relationship management as a core organizational
  process focuses on various activities that an organization
  perform in establishing, maintaining, and enhancing long-
  term associations with customers.
  (Berry 1995; Morgan and Hunt 1994; Srivastava, Shervani,
  and Fahey 1999)

0 This major relationship management processes are the
 marketing communication, interaction and customer’s
 perception of value leading to relationship dialogues.
                                              (Gronroos, 2004)

                         (c) Kalpana Chauhan
Relationship Management as Process

Why RM processes?
0 To derive strategic potential of relationships and pursue
  them as a differentiation strategy companies need to build
  relationship management capability. Capabilities are rooted
  in business processes and encompasses the value chain.
                                   (Leonard-Barton, D. 1992)




                       (c) Kalpana Chauhan
Levels of CRM process
Relationship Management as process need to be dealt at-
0 Macro level- process of building relationships with
  customers and include sub-processes like prospect
  identification, customer knowledge creation etc.
(Srivastava et al 1999, Plakoyinnaki andd Tzokas 2002
Reinartz et al 2003)
0 Micro level- process to manage all customer interactions
  ( Day and Van den Bulte 2002, Kohli 2003, Holmlund
  2004, Gronroos 2004)




                       (c) Kalpana Chauhan
Levels of CRM Process
There are three different possible levels:
(1) functional,
(2) customer facing, and
(3) companywide.

CRM process entails the systematic and proactive
management of relationships as they move from beginning
(initiation) to end (termination), with execution across the
various customer-facing contact channels.



                         (c) Kalpana Chauhan
Customer Relationships as
        Differentiation Strategy
       • Define the customer experience that customers value and
         Design the services (CE)
 CE

       • Engaging the employees
       • Alignment of all touch-points
 CC

       • Strategy development process
       • Multichannel integration process
       • Customer Information Management on ongoing basis
RM-P     (process)
                        (c) Kalpana Chauhan
Thanks



                         Kalpana Chauhan
Fortune Institute of International Business
                                 New Delhi
              kalpana.chauhan@fiib.edu.in

        (c) Kalpana Chauhan

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Customer Relationships: Business Strategy for Competitive Advantage

  • 1.
  • 2. Customer Focus Customer Focus was identified as the single most important differentiator between the best and the worst companies in an industry in a survey of 100+ senior executives. (Schmitt, 2003) (c) Kalpana Chauhan
  • 3. Customer Relationship Management CRM is a management approach that involves identifying, attracting, developing and maintaining successful customer relation over time in order to increase retention of profitable customers. (Bradshaw and Brash 2001, Massey et al 2002) Requires alignment of business strategy, organization (relational) structure and processes, customer knowledge and technology in such a manner, that all customer interactions can be organized to the unique positive customer experience resulting value for the organization. At its highest use, it is a competitive strategy. (c) Kalpana Chauhan
  • 4. CRM Focus 0 Strategic marketing related processes and capabilities. (Day 1994,99,2000, 2003) 0 KM and interaction process (Zablah et al, 2004) 0 Customer loyalty, profitability, acquisition ,retention (Kumar & Shah, 1999; Reinartz & Kumar, 2003; Venkatesan, Dick & Basu, 2003; Stauss et al, 2004) 0 Organizational culture, focused on creating quality (profitable) relationships (Ngai, 2005; Romano & Fjermestad, 2003) 0 A technology providing integrated view of customers (Zikmund, McLeod, & Gilbert, 2003) (c) Kalpana Chauhan
  • 5. CRM as Differentiation Strategy 0 Strategy is based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation. (Kaplan, 2004) 0 The value paradigm requires integration and real time optimization of the value chain between the customer, the firm and its extended enterprise. (Chan, 2005) (c) Kalpana Chauhan
  • 6. Proposed Conceptualization 0 CRM as differentiation strategy could be conceptualized in terms of three components: 0 Customer Experience as a driver 0 Customer Centricity as a design 0 Relationship Management as a process (c) Kalpana Chauhan
  • 7. Customer Experience Facts 0 86% of consumers quit doing business with companies because of a bad customer experience. (Harris Interactive, CEI Report, 2010) 0 It takes 12 positive service experience to make up for one negative experience. (Ruby Newell-Legner) 0 80% of the firms like to use customer experience as a form of differentiator. (Forrester: State of customer experience 2010) (c) Kalpana Chauhan
  • 8. Customer Experience At this very moment, it is happening. Across channels and touch points, customers are experiencing every company. Whether interacting on the Web, through a call center, on the phone, by way of e-mail or face-to-face, customers are experientially assessing the extent to which a company values their patronage. Those experiences are collectively serving to strengthen relationships—or, if the company is failing to fulfill its brand promise and to delight customers, are instead weakening the bond between its customers and its business. (Peppers and Rogers 2009) (c) Kalpana Chauhan
  • 9. Literature Focus has been mainly on service quality and measuring customer satisfaction Consumption’s experiential aspects (Holbrook and Hirschmann 1982) Experience Economy (Pine and Gilmore 1999) experiential marketing, Customer Experience (Schmitt 1999, 2003) Meaning, creation strategy Meyers and Schwager, 2007, Verhoef 2007 Atmosphere Baker et al. (2002); Kaltcheva and Weitz (2006); Wakefield and Baker (1998) Price Baker et al. (2002); Dorotic, Verhoef, and Bijmolt (2008); Gauri, Sudhir and Talukdar (2008); Noble and Phillips (2004); Assortment Baker et al. (2002); Broniarczyk, Hoyer and McAllister (1998); Huffman and Kahn (1998); Janakiraman, Meyer, and Morales (2006) Channel Neslin et al. (2006); Patricio, Fisk, and Falcao e Cunha (2008); Sousa and Voss (2006); Verhoef, Neslin, and Vroomen (2007) (c) Kalpana Chauhan
  • 10. What is Customer Experience Management? Customer’s interpretation of his or her total interaction with the brand (Ghose 2007) As such, a service provider cannot avoid creating an experience every time it interacts with a customer (Thompson and Kolsky 2004) The process of strategically managing a customer's entire experience with a product or company (Schmitt 2003) All interactions involved throughout the process and throughout the customer lifecycle culminate in a positive customer experience if customers go away feeling that their personal needs were met and they were treated with care. (c) Kalpana Chauhan
  • 11. What is Customer Experience Management? 0 Customer experience is the internal and subjective response customers have to any direct or indirect contact with a company. (Meyer & Schwager, 2007) -Direct contact: generally occurs in the course of purchase, use, and service and is usually initiated by the customer. -Indirect contact: most often involves unplanned encounters with representations of a company’s products, services, or brands and takes the form of word-of-mouth recommendations or criticisms, advertising, news reports, reviews, and so forth. (c) Kalpana Chauhan
  • 12. Customer Experience 0 Requires Outside-in approach 0 Can be seen from the traditional information- processing and decision oriented perspective and the experiential perspective. (c) Kalpana Chauhan
  • 13. Customer Centricity as Design 0 Amongst all CRM failure only 6% are due to technology, remaining are due to failure to change behavior, culture or organizational structure. (Richard 2008) (c) Kalpana Chauhan
  • 14. Customer Centricity 0 ‘Putting customer as the center of business and activities’. 0 It refers to the orientation of a company to the needs and behaviors of its customers, rather than internal drivers (such as the quest for short term profit). 0 Requires alignment of operating model behind a carefully defined customer segmentation strategy and tailor business streams- product development, demand generation, customer care, supply chain etc. (Gummesson 2008) (c) Kalpana Chauhan
  • 15. Dimensions of Customer Centric Organization Dimensions Customer centric organization Basic philosophy Serve customers: all decisions start with the customer and opportunities for advantage Business orientation Relationship-oriented Product positioning Customer segment centers, customer relationship managers, customer segment sales team, e.g. high net worth Organizational Highlight product benefits in terms of meeting structure individual customer needs Organizational Focus Externally focused, customer relationship development, profitability through customer loyalty, employees are customer advocates Performance metrics Share of customer wallet, customer satisfaction, customer lifetime value, customer equity Management criteria Portfolio of customers Selling approach How many products can we sell to this customer? How do we co-create value? Customer Knowledge Customer knowledge creates a valuable asset (c) Kalpana Chauhan Shah et al 2006
  • 16. Customer Centricity 1.Solve the customer’s problem completely by ensuring that all the goods and services work, and work together. 2. Don’t waste the customer’s time. 3. Provide exactly what the customer wants. 4. Provide what’s wanted exactly where it’s wanted. 5. Provide what’s wanted where it’s wanted exactly when it’s wanted. 6. Continually aggregate solutions to reduce the customer’s time and hassle. (Womack and Daniel 2005) (c) Kalpana Chauhan
  • 17. Relationship Management as Process What is RM process? 0 Customer relationship management as a core organizational process focuses on various activities that an organization perform in establishing, maintaining, and enhancing long- term associations with customers. (Berry 1995; Morgan and Hunt 1994; Srivastava, Shervani, and Fahey 1999) 0 This major relationship management processes are the marketing communication, interaction and customer’s perception of value leading to relationship dialogues. (Gronroos, 2004) (c) Kalpana Chauhan
  • 18. Relationship Management as Process Why RM processes? 0 To derive strategic potential of relationships and pursue them as a differentiation strategy companies need to build relationship management capability. Capabilities are rooted in business processes and encompasses the value chain. (Leonard-Barton, D. 1992) (c) Kalpana Chauhan
  • 19. Levels of CRM process Relationship Management as process need to be dealt at- 0 Macro level- process of building relationships with customers and include sub-processes like prospect identification, customer knowledge creation etc. (Srivastava et al 1999, Plakoyinnaki andd Tzokas 2002 Reinartz et al 2003) 0 Micro level- process to manage all customer interactions ( Day and Van den Bulte 2002, Kohli 2003, Holmlund 2004, Gronroos 2004) (c) Kalpana Chauhan
  • 20. Levels of CRM Process There are three different possible levels: (1) functional, (2) customer facing, and (3) companywide. CRM process entails the systematic and proactive management of relationships as they move from beginning (initiation) to end (termination), with execution across the various customer-facing contact channels. (c) Kalpana Chauhan
  • 21. Customer Relationships as Differentiation Strategy • Define the customer experience that customers value and Design the services (CE) CE • Engaging the employees • Alignment of all touch-points CC • Strategy development process • Multichannel integration process • Customer Information Management on ongoing basis RM-P (process) (c) Kalpana Chauhan
  • 22. Thanks Kalpana Chauhan Fortune Institute of International Business New Delhi kalpana.chauhan@fiib.edu.in (c) Kalpana Chauhan

Editor's Notes

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