The Following steps help to put the organization on the right path to CRM success

1. Remember that culture is supreme:

A CRM encompasses a mindset, a way of doing business and a way of interacting with others in the firm. The success of CRM implementation rests on the shoulders of a workforce that is willing to share information about clients and contacts. However, this “collaborative” mentality flies in the face of the culture within some professional services firms. For better or worse, many professional services practitioners are skeptical of sharing “contacts” information for the fear of losing opportunities to generate work that can produce themselves. However, if a CRM implementation is introduced to the workforce as an opportunity to create new opportunities for all, success rates will improve significantly.

2. Set Realistic Goals:

One of the greatest mistakes a management team can make is to force –feed technology across the organization. This is particularly true with the CRM implementation. As the firm management prepares for a CRM rollout, planning and patients are critical. Working with the implementation team from the software developer, management should agree upon a plan of phasing software use across the firm. Some organizations orchestrate a CRM rollout by location, others by practice group or department. A phased approach gives both the firm and the implementation team an opportunity to make adjustments, manage expectations, achieve milestones and promote successes.

3. Obtain and Maintain Senior Management support:

Successful CRM implementation start and end at the top. As a rule, successful CRM implementations are characterized as those in which management leads by example. Management should not sugarcoat the process or minimize the effort involved. Similarly, when milestones are achieved, the same managers should be the first to strongly promote the benefits being realized by the firm.

4. Analyze working Processes:

The process of fitting a CRM solution into a professional service organization provides a wonderful opportunity to evaluate processes and procedures across the firm. Working with the implementation team from the software provider firm, management should review, analyze and evaluate the firm’s procedure as well as all the data sources that are used in finding a CRM solution. This is the perfect time to discuss and develop new procedures that will increase the firm’s success.

Data gathered needs to be integrated:

Integrating data gathered from multiple points:

Today, firms gather customer data via multiple points spread over diverse delivery channels .Let us take illustration of a bank. The customer may carry out his debit and credit transactions with the bank at different branches/ATMs of the bank, located in different cities. Data is card of the bank; it would allow the bank to know at a click of a button, the complete history of the customer and his worth to the bank.

Integrating data scattered over multiple departments:

Normally in most business, customer points spread over diverse delivery channels. Let us take a bank for illustration. The customer may carry out his debit and while others may not have access to it .Often the data lie scattered over desperate sources each team/applications/purchase maintain its own database. A system that enables every executive easy access to the customer transaction/purchase behaviour is often absent.

Providing a single, cohesive, view of the customer:

CRM counters the above scenario and enable all the customer interacting executives to have a single, cohesive view of the customer. The tools aggregate the business and maintain the customer information in such a manner that ensures easy access for all. The tools also tie together the multiple channels of communication with the customers such as live chat through phone or e-mail. Hence, CRM is often described as the tool that leverages technology for delivering superior value to customers.

Data gathering becomes increasingly sophisticated and hi-tech:

CRM involves an integrated and automated approach to customer data gathering and technology is the pivotal in this process. In fact, the term “customer database” is now getting out dated it is now referred to by the term “Customer focused technology”. Hi-tech data warehousing is a part of this technology.

Marketing people must be involved in the running of the database:

One basic requirement in running the CRM set up is quality-manpower. People well versed with the relevant technology must be working on the database. But the job of developing and maintaining it cannot be left entirely to the software/data entry people to ensure that marketing could readily and meaningfully use the output from the system.

Customer Database:

Customer Database is the foundation of any CRM programme.

Today’s businesses are better placed for creating versatile customer database:

Today in most businesses, customer data flows in routinely. Customers feed in a good amount of data about them into the records of the company at the first contact itself that all transaction details automatically form part of the records. For example, a mobile phone customer provides to the phone company, right at the start certain basic information about him. Once the transaction commence, more and more details about him become available to the company. In fact, the company details of his incoming and outgoing calls are available to it. It also knows which value added services, promotional schemes and cross selling deals were of interest to the customer. Similarly, a customer of a credit card company provides the company a good amount of basic data about him \ and once the transaction start, the company knows how much the customer spend through the whole year, it will become an excellent database that is rich in content and capable of being used to great advantage, not only by the companies concerned but also by others in the marketplace setting out to acquire customers.

Customer database has to be comprehensive, up-to date and functional: The three most vital requisites of a good customer database are-

• Comprehensiveness
• Up-to-datedness
• Functionality

Comprehensiveness:

The customer database has to be comprehensive. In fact, it has to be so in two senses. It must cover all the customers and it must have all essential information about them. In practice, many data base do not meet these requirements in some others, essential details about the customers such as income, size of the family, and the products (durables) he already owns are not available. The reason is easy to discern. Though a lot of information on customers and data flows are routine in the today’s business, many firms fail to capture them.

Up-to-datedness:

Once the company puts a customer database together, it needs to keep updating it. After all the customer is a very dynamic entity and when the marketing environment is also highly competitive and fast changing. Updating customer data naturally that is up-to date and relevant, minimizing the wastage arising out of obsolescence and data irrelevance is a necessity for the firm.

Functionality:

The customer database should be functional as well. Though most companies appreciate that customer database is crucial to CRM, many of them do not appreciate that database must be functional. For instance, grouped by age, life style, employment, attitude and loyalty the database must be capable of being sliced and diced at will. Once then it can be described as functional.

GROUNDWORK FOR EFFECTIVE USE OF CRM:

Customer Relationship Survey Design:

The amount of work it takes to design and develop an effective survey is often an inhibiting factor that prevents many organizations from more aggressively finding out what exactly their customers are thinking.

Graphical design tools:

Sophisticated surveys are used by dragging and dropping elements in place. Questions include multiple choice, numerical scale and unstructured text.

Branching logic:

Surveys designed and executed can incorporate branching logic to dynamically present customers with different questions in real-time, based on their answers to previous questions.

Customer satisfaction Survey Design:

A customized CRM Customer Satisfaction Survey is designed for the organization or taking an existing survey and altering it to be administered via the Internet, telephone, fax or newspaper. All customer satisfaction survey instruments reviewed to assure validity, reliability and bias reduction. Relevant survey instruments should be composed that will yield sound and valid conclusions while achieving the maximum survey response rate possible.

Customer Satisfaction Surveys should cover nearly every facet of customer satisfaction including:

• Overall satisfaction
• Product –level satisfaction
• Importance Vs Satisfaction
• Timeliness of delivery
• Customer service process satisfaction
• Returns and Exchange process satisfaction
• Interest in new potential products and services.

For online CRM customer satisfaction surveys, send a personalized email invitation to each customer with simple directions explaining how to access and complete the survey

The organization should offer a number of unique services designed to help the clients achieve maximum survey response rate possible including personalizes email reminders to incomplete respondents.

Customer Loyalty Survey:

A Customer loyalty survey is ultimately a reflection of the company’s desire for customer feedback, as well as an expression of the organization to potential respondents. As such, whether one is starting from scratch or modifying an existing survey instrument, there are some key areas of consideration that should be taken into account. First, start with the overview of the content areas of the typical loyalty survey:

• Overall perception of quality ,cost and value
• Measurement of how customers perceive our corporate image
• Detailed questions about the areas where customers interact with you on day-to-day basis.

Gaining Higher Customer Survey Co-operation:

The following are the steps for higher customer survey participations-

1. Communicating the purpose by explaining what the survey means to maintain business relationship

2. Asking personal permission to participate in the survey

3. Reminding the customers tactfully

4. Sharing the findings-In some cases, consider an immediate gift of small value, and/or the chance to win a larger prize by entry to a draw. Online services are increasingly being used in the distribution of such incentives such as coupons.

Tools Required Supporting Your CRM Program:

• Technology.
• Using technology to maximize the benefits derived from customer relationships.
• Hardware and software.
• Technologies in use today.
• The technologies of tomorrow.
• People.
• Executing a CRM plan.
• Assuring a positive customer experience.
• How employees can maximize the customer's positive experience.
• How to support employees operating in a CRM work environment.
• Structure.
• The foundations of CRM.
• Orderliness.
• Processes.
• Metrics.
• Ensuring that the business functions smoothly for both employees and customers.
• Understanding the business.
• Customers.
• Products.
• Process segmentation.
• How to communicate within the organization to ensure that people function as a cohesive team.
• Metrics for monitoring and assessing the business and customer relationships

Types of Customer Relationship Programmes:

There are four types of Customer Relationship Programmes that enables the company to Win back customers who have defected or planning to create loyalty among existing customers. They are

1. Win Back or Save:

This is the process of convincing a customer to stay with the organization while they are discontinuing service or convincing them to rejoin once they have left. Of the four categories of campaigns, win back campaigns is four times more likely to succeed, if contact is made within the first week following a defection that if it is made in the fourth week.

Selectivity is another aspect of a successful win back campaign. Leading organizations often filter prospects for contacting to exclude customers who have frequently switched , who have bad credit ratings or whose usage is low.

To preserve the revenue stream and prevent the customer from becoming a “traditional” win back candidate, a few organizations are now including partial disconnects and reduced usage customers in their win-back campaign.

2. Prospecting:

Prospecting is the effort to win new, first time customers. Apart from the offer itself, the three most critical elements of prospecting campaign are segmenting, selectivity and sources. It is essential to develop an effective-need based segmentation model that allows the organization to effectively target the offer. Without this focused approach, the organization fails to achieve an adequate acceptance on the offer or spends too much on promotions, advertising and concessionary pricing.

Selectivity is important to prospecting as it is to win back. Need-based segmentation defines what the customer wants from the organization and profit-based segmentation defines how valuable the customer is and helps the organization decide how much it is willing to spend to get the customer. Pre-scoring a consumer credit rating is one of the techniques that organization can use to determine the latter.

3. Loyalty:

Loyalty is the third category in which it is most difficult to gain accurate measures. The organizations trying to prevent customers from leaving, uses three essential elements: Value based and Need based segmentation and predictive churn models. Value-based segmentation allows the organization to determine how much it is willing to invest.

Once the customer is determined to belong to the value based segmentation screening, the organization can use need-base segmentation to offer customized loyalty program. Affinity programs such as airline miles and hotel points are some of the most popular methods. However, the organization focus more on needs of individual customers, they find that they are able to achieve the same loyalty with less investment.

4. Cross Sell / Up-sell :

The Cross –sell/ Up sell is also known as increasing the wallet share or the amount the customer spends. The purpose is to identify complementary offerings that a customer would like. For instance, a basic long-distance customer could be a candidate to buy internet access. Up selling is similar but, instead of offering a complementary product, the organization offers an enhanced one. For example, If the customer has used his credit card a few times in apparel shop. CRM tool will enable the credit card company to send his customized mailers on apparel offers including special incentive schemes.

Cross- Sell and Up-sell campaigns are important because the customers targeted already have relationship with the organization. In financial terms, when a customer accepts a cross –sell or up-sell offer, that organization begins to reap more profits.

PRINCIPLES OF CRM:

CRM is much desired and enjoyable trip to arrive at a desired destination for the businesses. Though there is no magic formula for effective CRM, but there are certain guiding principles for CRM to function effectively. The following are the principles of CRM.

1. Start with a Strategic Customer Focus:

The Companies identify who they are and what the vision is and try to consider from strategic customer perspective. They try to consider and define the following three distinct criteria:

• If they generate revenue for the organization
• If they make the decision to acquire a particular product/service and
• If they are the “beneficiaries” of that product /service.

The criteria of buying is compared to the micro and macro environments  and evaluated to choose a fine tune  strategy.

2. Match Strategic Customers to Organizational competence:

Sustainable competitive advantage is achieved when organizational competencies are matched to customer profile .The organizations have the choice of three broad strategies:

• Product leadership
• Operational Excellence
• Customer Intimacy

In today’s consumption led economy, customer expertise is one of the best bets for permanent organizational advantage.

3. Adopt a set of CRM Strategy Drivers:

The customer strategic drivers have to be set depending on the business objectives. The following combination of drivers is set.

• Strategic Customer Acquisition(“get”)
• Customer Loyalty development (“keep”)
• Business Extension with existing customers (“Grow”)
• Value creation through customer experience management
• Diversification of new products and services to new customers
• Provision of tailored and customized  or total solutions
• Revenue or Profit, Market share or customer share.
• Mass Marketing, One to One Marketing or Direct Marketing etc
• The direction, focus and positioning of the strategies will affect
• Organizational policies and practices
• Business processes and implementation
• People and performance measurements
• Customer preferences and so on.

4. “Tangibilize” Vision and Strategies:

Vision is a broad statement of purpose and direction. Strategies are made up of specific, short to mid term goals. Very often, vision becomes blurred or distorted as they are passed down because misunderstanding and disagreements can occur regarding goals, roles and procedures. To prevent the vision from being a “NATO” (No Action Talk Only), it must be consciously, explicitly and systematically communicated to key shareholders, business partners, channels, customer and team members laterally and down the line. The organization may make mission in any functional areas (Marketing, Finance, Human Resources, Information Technology) of the management .The vision is translated into actionable tasks, people are able to relate to their roles and responsibilities identify their duties and  contribute for organization’s CRM vision effectively

5. Re-organize Metrics:

The following CRM metrics are set-

• Employee participation in CRM and usage
• Strategic Customer Acquisition
• Customer consolidation, retention and defection rates
• Brand impact
• Customer satisfaction ratings and loyalty ratings
• Customer knowledge
• Customer Entanglement
• Learning Relationships

These metrics are linked to business metrics such as revenue cost efficiency, Cross sell/Up sell rate, Market Share, Mind Share Customer share and profitability. They help to assemble the resources required and prepare an achievable CRM Roadmap.

Thus, the following CRM strategies and solutions have to be borne in mind for overall

• CRM success
• CRM is not software purchase, it is a strategy
• CRM must fit the way you work-Today and Tomorrow                                                               
• Business benefits and return on investment in CRM should be properly defined and measured
• Total cost of Ownership should determine carefully.
• Right Partner should be selected for successful CRM solutions.

GROWTH OF CRM MARKET IN INDIA:

In Peter F Drucker’s words, the purpose of business is to create and keep a customer. Every businessman understands the truth of these words. Today, when businesses are scrambling to get customers, the importance of Customer Relationship Management (CRM) must not be ignored. That’s why analysts, vendors, and solution providers are positive about the growth of CRM in the country.

Analysts have come out with skyrocketing figures about the growth of CRM in India. In Gartner’s view, the Indian CRM market size is about 15 percent of the overall APAC market, second largest in the region, after Australia. Between 2008 and 2013, CRM in India is expected to grow at a CAGR of 12 percent Gartner has significantly revised the growth rate of the Indian CRM market, specifically for the year 2009 in which it is expected to reach $80.3 million.

According to analysts, CRM has gained prominence over ERP. Sushant Dwivedy, Director-Microsoft Business Solutions, says, “Initially, they were packaged together as one solution. However, today, we are seeing a demand for CRM as a separate solution, one which is not dependent on ERP anymore.”

Growth Drivers:

According to Ramaswamy Rajgopal, Senior Vice President, CSC India, most organizations have implemented a customer strategy to have a 360 degree view of the customers across the enterprise and all the products that the enterprise produces. “For example, in the telecom space, the entire service management is automated with CRM. This includes acquisition of customers through call centers, service management, and billing. Similarly as the insurance industry diversifies its portfolio, the CRM application provides an effective way to enable cross-selling as well as provide a single point of customer contact to the enterprise,” he adds. Most packaged applications today offer solutions that address the specific industry needs with robust analytics allowing for end-to-end customer management.

Dwivedy of Microsoft says, “Today, getting new customers is a problem.  Retaining them is even more hard, which is in direct proportion to the growth factor of CRM.” For Team Computers’ Chopra and Religare’s Grewal, one factor driving the  growth of CRM is the need for the companies to optimize marketing spend and deliver offerings in a more defined manner.

“For example, in the auto industry, cross-selling has been happening between sales, financing, and insurance, and, to some extent, after-sales. The advent of vendor/brand agnostic service agencies will mean increased competition and obviously companies having more customer awareness will win,” adds Grewal.

Inspite of the economic slowdown, the CRM (Customer Relationship Management) market in India witnessed a healthy growth. IDC expects the CRM software market to grow at a CAGR (compounded annual growth rate) of 40 per cent to reach Rs 188.4 crore in 2006. The CRM services market is expected to grow even faster at a CAGR of 53 per cent to reach Rs 377 crore by the year 2006.

The CRM market in India is in the initial phase when there would be high demand for consulting services in order to bring a fit between the business and CRM application and also around deployment and implementation of the same. Organisations have started using 'Service Quality' as a key differentiator and are using it as their USP to increase revenues and to gain market share and that's precisely the reason why CRM has been hot in service verticals like financial and telecom services. 

According to Kapil Dev Singh, Country Manager, IDC India," Unlike ERM, which is top-driven and therefore faces a lot of inertia, CRM initiatives in most organisations are driven by the actual users (Customer Support Department, Sales Function, etc.). Further, the implementation cycles for CRM are shorter and automation of CRM related processes have a direct impact on a company's profitability. Therefore more and more Indian enterprises are expected to invest in CRM solutions to provide improved services to the customers and drive CRM market." 

This is supported by the fact that four out of five companies are spending on modular CRM (i.e point solutions). According to IDC's end-user survey conducted among 200 organisations, nearly 81 per cent stated that they are using modular CRM, while 19 per cent stated that they are using complete CRM package. The CRM applications that are primarily used are marketing automation closely followed by customer care and support automation.

According to the survey, the key business drivers for investing in CRM solutions are customer retention & loyalty and improving cost efficiencies. Another important reason that emerged for CRM adoption was to make sales force management more effective. This shows that Indian businesses are beginning to feel the heat from increasing competition and are actively trying to retain their loyal customer base.

BENEFITS OF CRM:

CRM is the process of acquiring, retaining and growing profitable customers. CRM helps business use technology and human resources to gain insight into the behaviour of customers and the value of those customers that create loyalty. CRM has several advantages.

• Provides better customer service
• Increase customer Revenue
• Discover new customers
• Prevents over spending on low value clients or under spending on high value ones
• Cross Sell/ Up sell products more effectively
• Help sales staff to close deal faster
• Make call centre more efficient
• Simplify marketing and sales processes
• Reduce Advertising costs
• Allows organization to compete for customer based service, not prices.

FORCES DRIVING CUSTOMER RELATIONSHIP MANAGEMENT:

 The following are the important  drivers (Psychological aspects)  that appear to have an important bearing on the decision to develop CRM approach:

1. Risk, Salience and Emotion

2. Trust and commitment

3. Perceived need for closeness

4. Customer satisfaction

I. Risk, Salience and Emotion:

Risk, Salience and emotions are psychological aspects involved in some way in every exchange/ purchase. The levels of risk, degree of salience and the emotion generated will affect the choice of product or service and supplier involved, as well as the ‘level’ of relational involvement the customer will seek.

Risk may be defined as “the perceived probability of loss interpreted by the decision maker” and presumes an element of consumer vulnerability in the exchange.

Salience may be regarded as the level of importance or prominence associate with exchange.

Emotion is the complex series of human responses (sometimes negatively described as ‘agitation of the mind’ or cognitive dissonance) generated as a result of the exchange.

Risk, Salience and Emotion are separately definable concepts but are not mutually exclusive. There is a close association between the risk perceived in, the salience associated with and the emotion generated by any given exchange situation. The high risk is often associated with high salience products or service and the high emotional outcome, although they are highly subjective and may differ from individual to individual.

It should be noted that a particular exchange relationship will generate a perception of high level of risk, salience and emotion with one customer yet, the same transaction in repeated will only generate a low level with another.

II. Trust and Commitment:

The requirement for trust and commitment appears to be an important indicator of when relationship management strategies may be potentially vulnerable. Equally the existence of trust and commitment among parties is seen by some central to the success of relationship marketing strategies and the main means by which the affective strength of a buyer-seller relationship can be judged.

Trust:

Trust is seen as an important driver to both relationships and relationship enhancement in that it would appear to reduce risk perception more effectively than anything else.

Trust is an essential ingredient in healthy personality, a foundation for interpersonal relationships a prerequisite for co-operation and a basis for stability in social institutions and markets. Generating co-operative behaviour trust may-

• Reduce harmful conflict
• Decrease transactional costs(e.g. negating the need for constant checks)
• Promote adaptive organization form(e.g. Network relationships)
• Facilitate rapid formation of ad hoc network groups
• Promote effective response to crisis
• Many different words are used to describe trusting situations. They are
• Probity: Probity focuses on honesty and integrity that may mean in business terms as professional understanding and reputation.
• Equity: Factors such as fair-mindedness, benevolence, caring values and sincerity are in evidence here.
• Reliability: Reliability relates to a firm having required expertise to perform its business effectively and reliably.
• Satisfaction: Satisfaction represents overall evaluation, feeling or attitude about other party in a relationship.

Commitment:

Commitment implies that both parties will be loyal, reliable and show stability in the relationship with one another. It is therefore, a desire to maintain a relationship, often indicated by an ongoing investment into activities, which are expected to maintain that relationship.

Whatever the industry, it is important to build trust and commitment if the establishment of a lasting relationship is the goal. There may be number of precursors to trust and commitment, including –

• Relationship termination costs
• Relationship benefits
• Shared values
• Communication and Opportunistic  behaviour

III. Perceived Need for Closeness:

Closeness can be physical, mental or emotional and can strengthen the feeling of security in a relationship. Close relationships are acknowledged to be more solid and likely to be longer lasting which are precisely the characteristics rational marketers are looking for.

Not all the customer want close relationships and some may only be interested in developing them with some parties and not with others. Sometimes, establishing high degree of close customer/employee relationship may also involve high risk and challenge.

IV. Customer Satisfaction:

Oliver defines Customer satisfaction as follows “Satisfaction is the customer fulfilment response. It is a judgment that a product or service feature, or the product or service itself provides a pleasurable level of consumption related fulfilment.”

Satisfaction can be viewed as contentment. Satisfaction may also be associated with some sense of happiness. For those services that really surprise in the positive way, satisfaction may mean delight. And in some situations, where the removal of negative aspect leads to satisfaction, the consumer may associate a sense of relief with satisfaction.

Retention in competitive markets is generally believed to be a product of customer satisfaction. Satisfaction is a psychological process of evaluating perceived performance outcome based on predetermined expectations.

Satisfaction drivers

Cumby and Barnes suggest that driver exist on five levels and ,that these generally involve progressively more personal contact with the service supplier:

• Core product or service
• Support service and systems
• Technical performance
• Elements of customer interaction
• Affective dimension of services

It is quite possible for the supplier to get things right on the first four levels and to dissatisfy the customer because of something that happens on the fifth level. This emphasize the importance of ‘critical episode’ in the exchange process

Key Stages of CRM:

Customer Relationship Management is seen as a means of identifying, establishing, maintaining, enhancing and where necessary terminating relationships.  The definition anticipates that once the company starts thinking about individual customers, it should recognize that different customers are at different stages of relational development. Importantly, it also implies that each customer types should be handled in a different way. This may include different targeted messages and different ‘value options’ from the exchange. The key stages of CRM are explained through the tabular form:

Sl.No	Stage	State	Culture
1.	Satisfaction Based	Reactive	Meet customer needs Responds to Complaints Minimal evaluation of customer service levels.
2.	Performance based	Proactive	Evaluate customer Perception Identify customer retention factors
3.	Commitment based	Very Proactive	Evaluate multiple customer needs Continuous inbound or outbound flow and feedback Continuous improvement

CRM are mainly of two different types. Reactive serviceis where the customer has a problem and contacts the company. Proactive service is where the manager decides not to wait for the customer to contact the firm, but contacts the customer himself in order to establish a dialogue and solve problems.

Dwyer suggests a five-stage model where each phase represents the following:

1. Awareness:Awareness is where one party recognizes that the other party is a ‘feasible exchange partner’.

2.  Exploration: Exploration refers to the ‘research and trial stage’ in the exchange. This stage includes sub phases such as attraction, communication and bargaining, development and exercise of power and expectation development.

3. Expansion:Expansion refers to the period where there is a continual increase in benefits obtained by exchange partners and they become increasingly interdependent.

4. Commitment: Commitment relates to the implicit or explicit pledge of relational continuity between the parties.

5. Dissolution:Dissolution refers to possibility of withdrawal in any relationship

In defining the scope of E-CRM, three different levels can be distinguished:

1. Foundation services: They include the minimum necessary services such as website effectiveness and responsiveness as well as order fulfillment.

2. Customer –centered services: These include order tracking, product configuration and customization as well as security / trust.

3. Value –added services:  These are additional services such as online auctions and online training and education.

Self services are becoming increasingly important in CRM activities. The rise of Internet and e-crm has boosted the options for self service activities. A critical success factor is the integration of such activities into traditional channels. An example was Ford’s plan to sell cars directly to customers via its website,which provoked an outcry among its dealer network.

Direct Marketing:

Definition:

            Direct Marketing is an interactive Marketing system that uses one or more advertising media to affect a measurable response and / or transaction at any location.

            Today, many direct marketers see direct marketing as a broader role, that of building a long-term relationship with the customer (Direct Relationship Marketing). Direct Marketers occasionally send birthday cards, information materials or small premiums to select numbers in their customer database. Airlines, hotels and other business build strong customer relationship through frequency award programmes and club programmes.

Advantages of Direct Marketing:

• The following are the advantages of Direct Marketing-
• Delivers near-perfect solutions to customer’s problems
• Gives individual attention to customers
• Facilitates finalizing of offers through interaction with the manufacturers, wholesalers or retailers as the case may be.
• Offers customized products  as per the preference of the customers.
• Helps achieve excellence in products/services
• Eliminates the hassles of going through marketing channels / stores.
• Facilitates sharper segmentation and targeting, ultimately each individual becomes a specific target market.
• Facilitates relation building with the customers
• Is better measurable, compared to mass marketing
• Is more cost effective
• Saves channel costs for the most part
• Saves advertising cost almost totally
• Is a versatile form of marketing, helps being selective in treating customers and pay special attention to large accounts.
• Benefits the customers too by enabling them to shop by sitting at homes save their precious time
• With every development in IT, Direct marketing’s efficiency keeps increasing, cost keeps decreasing.

Forms of Direct Marketing:

            Direct Marketing has several forms as it incorporates a variety of media. Direct –Mail Marketing is one form of Direct Marketing. Customized Mailing through databases and “Mail Merge” of word processing is the medium used here. Telemarketing is another form of Direct Marketing. Here, the phone is the medium used. Today, Direct Marketing uses the new age tools such as Computers, Mobile phones and the Internet for reaching prospects customers individually. Their availability at a low-cost and high-reach has substantially enlarged the Direct Marketing Opportunities.

1. Direct Mail Marketing:

            Direct Mail Marketing is similar to Mail Order Marketing / Catalogue Marketing. Usually, when a trading house markets various products by mail order, it is referred to as Mail Order Marketing  and  when a manufacturer practices the same method it is known as Direct Mail Marketing. Certain softwares allow creation of personalized letters, messages and offerings. In direct mail marketing, not only letters / brochures   are mailed to the prospects, but product samples, gifts and complaints are also mailed, depending on the context.

Example: Mother Care India does Direct Mail Marketing .It targets the mothers who buy items meant for kids.

2. Direct Response Marketing:

            Direct Response Marketing  is another expression of direct marketing. Direct Response Marketing uses different media (including letters / mailers), like telephone, radio, TV and Internet. Some direct response marketing campaign, rely totally on television “infomercials” (Commercials which give information about products, benefits and usage aspects and obtain responses). Toll-Free telephones too serve as a useful tool of direct response marketing. Toll free telephones help better ordering by the customer, better dialogue between the customers and the company and better service to the customer.

Example:  Dell Computers is one Company that heavily relies on toll free numbers to elicit customer responses.

3. Database Marketing:

            Data base Marketing is yet another expression in direct marketing. Although all forms of direct marketing are data base-driven, some experts treat database marketing as distinct form of direct marketing.

4. Tele-Marketing:

            Telemarketing is yet another form of direct- marketing tool. Hence, the marketer goes direct to the customer using telecom / IT facilities. Telemarketing is less expensive as compared to most other forms of selling. Moreover, it can be used in respect of different types of products. It suits industrial products, services and consumer durables. Telemarketing is usually done through special campaigns. Contact is established with hundreds of prospects in a campaign that normally runs through a few days. Several tele callers are hired for the tele-call operations. The Call Centre is the real operation theatre in telemarketing.

5. Tele-shopping /Home Shopping:

            Tele-shopping, alternately known as home shopping is yet another of direct marketing. One of the major characteristic of Teleshopping is that it is a low cost retailing system. Here, the marketer hawks the products on air and the consumer watches it on his TV screen at home, phone up the marketer and buys his requirement. With tele-shopping, in addition to the convenience, discounts, gift offers are also given to the customers.

Example: Doordarshan, for example allowed its channel for tele-shopping by Dee’s network on a profit sharing basis. DD gained a share from every item sold by the network.

6. Face to Face Selling:

            The original and oldest form of direct selling is the field sales call. Today most industrial companies rely heavily on a professional sales force to locate prospects, develop them into customers, and grow the business or to hire the manufacturers representative agents to carry out the direct selling task. In addition, many consumer companies use a direct selling force. Insurance agents, stock brokers and distributors working for direct sales organizations such as Avon, Amway, Mary kay and Tupperware.

7. Email marketing:

            Email marketing is also a direct marketing tool. A major concern is spam, which actually predates legitimate email marketing. As a result of the proliferation of mass spamming, ISPs and email service providers have developed increasingly effective email filtering programs. These filters can interfere with delivery of e-,mail marketing campaigns, even if the person has subscribed to receive them as legitimate email marketing can possess the same hallmarks as spam.

8. Door to Door Leaflet marketing:

            Leaflet distribution services are used extensively by the fast food industries, and many other business focusing on a local catchments business to consumer business model. similar to direct marketing, this method is targeted purely by area, and costs a fraction of the amount of a mailshot due to not having to purchase stamps, envelopes or having to buy address lists and the names of home occupants.

9. Voice Mail Marketing:

            Another type of direct marketing which has emerged is personal voice mail boxes and business voice mail systems. Voice mail marketing is a cost effective means to reach people with warmth of human voice. More recently, business has utilized guided voice mail (an application where pre-recorded voice mails are guided by live callers) to accomplished personalized business-to- business marketing formerly reserved for telemarketing. As there are abundance of “voice spam”, jurisdictions have passed many laws for regulating consumer voice mail marketing.

 

10. Multi level Marketing:

            Multi level marketing is a modified version of direct selling .Some times, it is referred to as network marketing, member to member marketing and affiliate marketing. Only firms which do not mind experimenting in reading customers practice it. The Process begins with sales person cum distributors introduced to the company by a sponsor. Each distributor picks up a product worth a certain sum and sells directly .After they have sold first consignment, they are allowed to pick up next. The distributor can recruit a second ring of distributor. The distributor earns commission at two levels and the process goes so on. Amway, Avon, Oriflame are the largest MLM outfits in the world. The Indian firm Modi care also sell its range of house hold  and personal care products.

11. Online Marketing:

            As many people find way onto Internet, the cyberspace population is becoming more mainstream and diverse. As a whole, Internet population is younger more affluent and better educated, they are more likely to use Internet for entertainment and socialising. Marketers are doing  on-line marketing by creating an electronic presence on the Internet, placing ads online, participating in forums, newsgroups, bulletin boards and web communities, and using e-mail and web casting.

Other direct selling forms:

            Some direct marketers also use media such as door hangers, coupons, package inserts, magazines, newspapers, radio, television, email, internet banner ads, digital campaigns, pay per click ads, billboards, transit cards etc.

Direct Marketing in India:

            While direct selling has thrived in India all along in the Insurance business, in other businesses, it has been catching up in the country only in recent years. But the progress has been rapid in the short period. Amway, Avon, Oriflame, Tupperware are all present in India. And Modi care has been using the method for selling its homecare and personal care products. Hindustan Unilever has also set up in more schemes, its direct selling outfit for its Aviance range of cosmetics.