Criteria for creating value for customers:

Technology for relationship marketing:

Technologies can be regarded as our efficient and reliable friend. But technology, if inappropriately applied, it can effectively push a customer away. However, technology has come to stay. Companies are investing heavily in technologies associated with computing and communication-within their enterprises, between themselves and their customers, distribution channel, intermediaries and suppliers. Data warehouses are proliferating. Companies of all size strive for computerizing all their activities and thus making the process more uniform.

In this digital era, there are 11 C’s of relationship marketing that can come together simultaneously to create the value for the customers. These 11 Cs are.

Criteria for creating value for customers:

1. Customers 2. Categories of goods and services 3. Capabilities 4. Cost profitability and value of contact to cash process 5.Control 6.Collaboration and Integration 7.Customisation 8.Communication 9. Customer measurements. 10. Customer care; and charge of relationship 11.Chain of relationship.

These are explained below:

1. Customer:

Technology provides the computing and communication capabilities that help the relationship marketer decide on which customers to focus and facilities the interactions needed, both with the enterprise and with its customers and suppliers, to deliver customer value. Without technology, marketers would still be thinking in terms of serving the mass market or market segments. They would still be thinking in terms of serving the mass market or market segments. They would still be thinking in terms of broadcast, one-to –one communication. They would be thinking in terms of long production runs of standardized products, one size fitting all. With technology, the specific customers with whom the company wishes to do business can be identified and further evaluated for their worthiness to pave way for a long term relationship. If the data warehouse is built appropriately, the marketer should be able to ‘slice and dice’ the data a number of ways, so that even people who are not trained in technology can use it easily.

2. Categories of goods and services:

Technology can also help the company take two key strategic decisions; what categories and types of goods and services should we provide to our customers and should we ourselves produce the goods and services that customer want?

While taking decisions regarding scope of service, it is useful to understand the full range of value a customer perceives that he/she delivers directly from the company’s products. The tangible and intangible components are associated with physical goods. The intangible components may lend themselves to more real times. Customization and Personalization, the tangibles can be assembled with the tangibles by some one other than the manufacturer. Thus, some of the decisions the manufacturer must make may pertain to benefits that will be provided and by some company in the chain of relationships.

3. Capabilities:

Technology has vital roles to play in the advancement of a company’s capabilities. The implementation of technology itself comprises the heart of the relationship marketing. Computing, data warehousing, website or interactive voice response etc.

4. Cost, Profitability and Value:

Technology can help the company manage the costs of securing, serving and retaining customers by allowing marketers to understand, in real time, the revenues and cost associated with each other. This can obviously help the relationship marketer to control and focus the relationship.

Technology can also intercede and help manage the costs and value of the relationship, drawing upon previously developed “business rules”. Business rules incorporate decisions that a management makes to guide the administration of its business and interaction with customers.

5. Control of the contact to cash processes:

Whatever the role of technology, it must have a control function to ensure that value is indeed being created for customers and for the company, and that bills are sent and payment received on time. Most companies have invested heavily in information systems that have served well for company-driven marketing, from the firm to the market. Now, with the boundaries of the enterprise blurring, with customer framing the value that each want and initiating the purchase decision, dimensions of control are becoming very tactical and strategic.

Employees learning and growth measurements could include employee retention, employee skills, employee satisfaction and employee productivity. Business process measures are typically specific to the processes being measured. In each of these cases, technology has a role to play in providing the data needed by the relationship marketer in real time, or in near real time, to enable additional investigation or action. If there is customer retention problem or a share of customer problem, for example, technology can be operating in the background, unseen to the relationship marketer, gathering and evaluating data and providing the relationship marketer with exceptional reports.

6. Collaboration and Integration

When the customer is invited into the process that creates value for her, she is more likely to increase the level at which she is bonded to the company. The process which creates the value she seeks could be in any or in all process. Thus, the customer could work with a vendor to collaborate in areas such as product and service. Conceptualization, design, development,  production to order, value bundling, distribution and  service/support.

Technology can help customers collaborate with their suppliers to create mutual value. Electronic Data Interchange, in particular, has had significant impact on order –taking, shipping and invoicing processes, causing improved turnaround of orders, cash flow and structural bonding.

7. Customization

Customization should not be confused with personalization. Customization allows the company or the customer or both to develop a product, service or communication that reflects the value the customer wants. Personalization is the process that enables communication, product and service to bear the name of the customer, adding value to the customer as they position themselves with others. When personalization is combined with customization,  people start reaching for their wallets.

8. Communication, Interaction and Positioning:

Mass marketing required mass –promotional vehicles such as TV, radio, news papers and outdoor media. In a Fragmented market, the promotion channels are much narrower and more highly targeted; including specialized magazines, advising on everything from park benches to ski chair lifts, etc that is broad casting first became “narrow casting” and has now become “Point casting”. When point casting is interactive and real time, it may be termed conversing just as a conversation between people. Conversing occurs at the initiation of either the customer or the company and can involve technology such as call centre, the internet or interactive voice response and others. Other forms of interactive communication has emerged, including interactive telephones-based communication, using the call centre, for so –called Telemarketing or Telesales, and communication over the internet that offers an opportunity to engage supplier ,called ‘web casting’

Technology can help the company to converse with individuals at a cost that reflects the value of the communication, and can discriminate among the purpose of different communication assigning the appropriate media to fulfill the each task.

Technology provides knowledge and insight to let the firm contact the customer at the right time i.e, when they are ready to buy- and use the media each customer prefers to reach him/her. Using ‘intelligent agent’- a software that can search for information, customers can even specify the information to be sent and then the agents can go on to the web to find the information wherever they have been programmed and send information as specified to each customer.

9. Customer Measurements:

Technology can assist the company to understand current and emerging customer issues while there is still time to address the problems without damaging the relationship. For example, measurements can be maintained on time liners of delivery, waiting time before customer calls are answered, and time to address customer complaints. All this can be done in the background, using technology to manage the information and provide management reports. Technology can also be used to track measurement such as customer profitability, share of customer expenditure and the customer’s state of mind , with research data logged into database. Once compensation is linked to customer measurements, such as these, this   area will assume unprecedented importance and attention.

10. Customer Care:

Technology has a major role to play in providing customers with the attention they seek. The internet can be particularly cost effective in shifting cost structure from human operation.

11. Chain of Relationship:

A chain of relationship comprises the series of linkage between the end –customers and all the stake holders which contribute to the value they receive. These stake holders include suppliers, distribution channel intermediaries, employees, customers and others, such as investors and the board of directors. They are all to be forged into strong chains that will all ever increasing value to the end-customers relationship. The relationships the company forms with end-customers will be only remain as the weakest link in the chain. All efforts are needed to maintain and deepen the relationship with the end-customer.

Technology has a important role in the structural bonding among all the components of the chain of relationship. For years, companies have used independent and often proprietary solution-those that they develop themselves to achieve this bonding. They put this software and/or hardware on their customer’s premises to give them power to initiate paperless ordering.

CRM Process Framework:

A four stage relationship marketing process was developed by Atul Parvathiyar and Jagdish. N. Sheth . The model suggests that relationship marketing process comprises of

Four sub processes:

• Formation Process
• Management and Governance  process
• Performance Evaluation process
• Relationship Evolution or enhancement process.

 The generic model is shown in the figure.

 

Relationship Marketing Process Framework

  

I. Formation Process of Relationship Marketing:

The formation process of relationship marketing involves the decisions that must be made regarding the initiation of relationship marketing activities for a firm with respect to a specific group of customers or an individual customer with whom the customer wishes to engage in a cooperative and collaborative relationship. In the formation process, three important decision areas relate to defining the purpose (objectives) of engaging in relationship marketing, selecting parties (customer partners) for relationship marketing and developing programs (relation activity schemes) for relationship marketing engagement.

II. Management and Governance Process:

Once a relationship marketing program is developed, the program as well as the individual relationship within it must be managed and governed. For mass market customers, the degree to which there is symmetry in the primary responsibility in deciding whether the customer or the program sponsoring company will be managing the relationship values with the size of the market. However, the programs directed at distributors and business customers, the management of the relationship require the involvement of both the parties. The degree to which these governance responsibilities are shared or managed independently depends on the perception of norms of governance processes among rational partners given the nature of their marketing program and the purpose of engaging in the relationship. Not all relationships are managed alike. However, several researchers have suggested appropriate governance norms for different hybrid relationships.

Irrespective of whether relational partners undertake management and governance responsibilities independently or jointly, they must address several issues. These include decisions regarding role specification, communication, and common bonds, planning process, process alignment, employee motivation and monitoring procedures.

III. Performance Evaluation Process:

Companies need to undertake periodic assessment of the results of relationship marketing in order to evaluate whether or not programs are meeting expectations or whether or not they are sustainable in the long run. Performance evaluation is also useful because it allows firms to take corrective areas of relationship governance regarding continuation, modification or termination of relationship marketing programs.

IV. Evolution Process of Relationship Marketing:

Individual relationships and relationship marketing programs are likely to undergo change as they mature. Some evolution paths may be planned, where as others will evolve naturally. In any case, the partners involved have to make several decisions about the evolution of their relationship marketing programs .These include the decisions regarding the continuation, termination, enhancement and modification of  the relationship engagement. Several factors could affect any of these decisions. Among these factors, relationship performance and relationship satisfaction are likely to have the greatest impact in the evolution of relationship marketing programs. When performance is satisfactory, partners would be motivated to continue or enhance their relationship marketing program. When performance does not meet expectations, partners may consider terminating or modifying their relationship. When companies can chart out their relationship, they can engage in relatively systematic relationship marketing programs.

Types of CRM:

There are several different approaches to CRM with different aspects. In general, Customer Service, Campaign Management and Sales Force Automation (SFA) form the core of the system (with SFA being more popular).

1. Operational CRM:

Operation CRM provides support to “Front Office” business processes. For example, Sales Marketing and Service Staff. Interaction with customers is generally stored in customer contact histories and staff can retrieve customer information as necessary. The contact history provides staff members with immediate access to important information on the customer (Product owned prior support calls etc) eliminating the need to individually obtain this information directly from the customer. Reaching the customer at right time at right place is preferable.

Operational CRM processes customer data for a variety of purposes:

• Managing Campaigns
• Enterprise Marketing Automation
• Sales Force Automation
• Sales Management System
• Activity and Time Management
• Quotation and Order Processing
• Delivery and Order Fulfillment
• Tele-marketing and Tele-sales
• Customer Service and Support
• Remote Access

2. Analytical CRM:

Analytical CRM analysis customer data for variety of purposes:

• Designing and Executing targeted marketing campaigns
• Designing and executing campaigns. For example- Customer Acquisition, Cross selling, up selling and add on selling.
• Analyzing customer behaviour in order to make decisions relating to products and services ( eg. Pricing, Product development)
• Managing Information System (eg. Financial Forecasting and Customer Profitability Analysis)
• Customer Segmentation (eg. Age, Sex, Income level)
• Trend Analysis for Customer Satisfaction.

Analytical CRM generally makes heavy use of data mining and other techniques to produce useful results for decision making.

3. Sales Intelligence CRM:

Sales Intelligence CRM is similar to Analytical CRM, but it is intended as a more direct sales tool. Features include alerts sent to sales staff regarding

• Cross selling/ Up selling / Switch selling opportunities
• Customer drift
• Sales Performance
• Customer trends
• Customer margins
• Customer Alignment

4. Campaign Management CRM:

Campaign Management combines elements of operational and Analytical CRM. Campaign Management function includes:

• Target groups formed from the client base according to selected criteria
• Sending Campaign related material (eg. On special offers) to selected recipients using various channels (eg. E-mail, Telephone, SMS, Post)
• Tracking, Storing and analyzing campaign statistics
• Tracking responses and analyzing trends.

5. Collaborative CRM:

Collaborative CRM covers aspects of a company dealing with customers that are handled by various departments with in the company such as sales, technical support and Marketing. Staff Members from different departments can share information collected when interacting with customers. For example, feedback received by Customer support agents can provide other staff members with information on the services and features requested by customers. Collaborative CRM’s ultimate goal is to use information collected by all departments to improve the quality of services provided by the company.

Collaborative CRM processes customer data for variety of purposes:

• Enterprise Portals
• Customer Access
• Supplier Access
• Personalisation

Core CRM Activities:

Survey Management Software:

Survey software automates an enterprise’s electronic surveys, polls, questionnaires and enables to understand customer preference once the customer is categorized, the company can start promotions and pricing accordingly

Sales Force Automation (SFA):

Occurrences of customer contacts are logged in the database. SFA Software can automatically route customers who contact the sales representative. Companies can contact the sales representative forecast the customer’s need based on the customer history and transactions. This initial lead software is called “Lead Management Software”. This software enables to track the transaction from the initial lead to post sale follow up.

Sales Campaign Management:

This software lets a company organize a marketing campaign and compile its results automatically.

Marketing Encyclopedia:

This software serves as a database for promotion of the products. The material can be routed to sales representatives. This can also be shown to the customers on request.

Call Centre Automation:

When customers call a company to get assistance with the continued products, representatives can query a knowledge management database containing information about the product. Some knowledge management software accepts query natural language. If the company must develop a new solution in response to customer query, the information can be added to the knowledge base, which becomes “smarter”.

Business Relationships:

Interaction with other companies and partners such as suppliers/vendors, retail outlets/distributors and industry networks (lobbying groups, trade associations).This external network supports front and back office activities.

CRM is not just a technology but rather a comprehensive, customer centric approach to an organization’s philosophy of dealings with its customers.

Components of CRM

CRM is the combination of policies, processes and strategies implemented by an organization to unify customer interactions and provide a means to track customer information. CRM brings together lots of pieces of information about customers, sales, and marketing effectiveness and market trends. CRM software is used to support these processes, information about customers and customer interactions which can be entered , stored and accessed by employees in different company  departments..

The Generic constituents are

Components of CRM

CA- Customer Acquisition encompasses:

           Counter staff automation

                        Marketing

CR- Customer Retention through:

                        Data warehousing and analytical tools

                        Customer service

                        Call service

                        Contact center

ICV- Improved Customer value through:

                         Marketing automation and campaign management for cross-selling and up-selling

                         Data Warehousing and analytical tools       

CRM includes many aspects which relates directly to one another through :

Front Office Operations:  Direct contact with customers. For  example. Face to Face meeting, Phone calls, emails, Online services etc.

Back Office Operations:  Operations that ultimately affect the activities of the front office (e.g. Billing, maintenance, planning, marketing, advertising, finance, manufacturing etc.)

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.