1 Sajal Kabiraj Joghee Shanmugan

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IJMP2009


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WWW.IB-TS.ORG2008 I NTERNATIONAL B USINESS AND T OURISMS OCIETY P UBLISHING G ROUP

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INTERNATIONAL JOURNAL

OF MANAGEMENT PERSPECTIVES

C ONTENTS P AGE

Indigenous Customer Relationship ManagementPractices in Indian Automobile Companies:Strategic ImplicationsSajal Kabiraj, Joghee Shanmugan

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V OLUME 1 - IJMP - I SSUE 4 / 2009ISSN: 1307 - 1629

EDITORH USEYIN ARASLI


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ABSTRACT

IJMP is a publication of International Business and Toursim Societywww.ib-ts.org/ijmp.htm 2009 All rights reserved.

Indigenous Customer Relationship Management Practices in Indian Automobile Companies: Strategic Implications

Sajal Kabiraj*,

Department of Management,Skyline University College,University City of Sharjah,UAE

Joghee Shanmugan* Department of Management,Skyline University College,University City of Sharjah,UAE

Maintaining relationships with customers and offering them complete customer sat-isfaction seems to be the foremost agenda on the minds of automobile companies thesedays. Customer Relationship Management (CRM) seems to offer the much needed strat-egy and solution to keep customers happy, smiling and connected with the organiza-tion across their lifetime. CRM has multiple facets and implications for the automobilecompanies who always seem to be eager to go that extra mile in order to be able toretain their customer base, prevent cannibalization from competitors and for keepingtheir loyal customers coming back to them for more.The authors have studied two casesof competing automobile (car) companies in India and the effect of implementation ofCRM strategy and practices. It was observed that customer satisfaction increased withthe successful implementation of CRM practices across the organization. Repeat buyingthrough exchange schemes and loyalty additions on old cars were more accepted by thecustomers who were happy with their previous buying experiences and post sales ser-vice from the car company. Expansion of the customer base through retention (if size-able market share exists), and through promotions and value-added offerings (incaseof new product introduction / entrants) was the order of the day. It was also observedthrough the study that effective word of mouth contributed to higher sales and it waseasier to cross-sell new offerings to existing customers than to acquire new customers

and convince them about the product bene ts and offerings. Lessons from the same havebeen drawn and implications suggested through this research study

Keywords: Customer Relationship Management, Competition, Opportunity Cost, KeyAccount Management.

* Corresponding author: Sajal Kabiraj, Joghee ShanmuganTel: +971 6 5441155 Ext 219

E-mail: [email protected], [email protected]


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ISSN: 1307-1629, 2009, 4 (1) S. Kabiraj, J.Shanmugan

INTRODUCTION

Customer Relationship Management is as old a concept as marketing itself. Firms in both business to business and consumer markets have always (whether by accident or by design) made attempts to encourage repeat buying from regular and frequent con-

sumers. However, as markets worldwide become highly competitive, companies aredesperately looking for ways and means to differentiate their offerings from those oftheir competitors. Customer Relationship Management seems to have emerged as astrategic management tool which is being adopted by most companies to retain custom-ers, lest they should shift their loyalties to another company.

In todays context, Customer Relationship Management is based on two principles:(i)It makes the opportunity cost of getting out of the relationship somewhat prohibitivefor the customer.(ii)It is more pro table to keep customers for a long term; that it makesa great deal of sense to keep existing customers happy rather than devoting high levelsof marketing effort on acquiring new ones.

RESEARCH GAP AND OBJECTIVES

In recent months, Maruti has been losing its position as the market leader to Hyundai,with the sales of Hyundai Santro overtaking those of Maruti. Apart from technologi-cal superiority and an aggressive marketing and advertising strategy, Hyundai has suc-ceeded in differentiating itself in terms of creating and retaining relationships with itscustomers. Although MSIL has had a customer-service orientation and built the largestnetwork of dealers, showrooms and service centres in the country, it still lags behind incustomer satisfaction. We made an attempt to study reasons for the same and make rec-ommendations to MSIL for an effective Customer Relationship Management program.

Our primary objective of conducting this research is to measure the impact of indig-enous customer relationship management (CRM) practices for the automobile compa-nies in India. And this research tries to concentrate on evaluation and measuring the

performance of CRM processes.

The associated research objectives are:To examine the impact of CRM practices on business processes, technology and stra-tegic integration.To enhance the excellence in CRM and to discover the imperative factors those per-suade the customer relationship management.

This research study chooses to make recommendations for improving the CRM strate-

gies for the selected automobile companies, so that they can build and sustain long-termtrusting relationships with its customers, suppliers and vendors across the entire valuechain.


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INTERNATIONAL J OURNAL OF M ANAGEMENT P ERSPECTIVES

CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management is about attracting, maintaining and enhancingcustomer relationships. It focuses on the lifetime value of the customer instead of asingle transaction. Customer Relationship Management is not a different kind of adver-

tising model; it is a different kind of business model. It is about enabling the brand touse hard data to understand and guide the relationship that exists between the brand andits customers- both present and future. A business relationship requires identi cationof good customers, who want a reciprocal relationship to create new value for mutuallong-term bene t. Customer Relationship Management is an on-going process of iden -tifying and creating new value with individual customers, and then sharing the bene tsover a lifetime of association. It involves understanding, focusing and management ofon-going collaboration between suppliers and selected customers for mutual value cre-ation and sharing through interdependence and organizational alignment.

Unlike most advertising, CRM does not end with getting the potential customer readyto buy. It does not even end with the actual sale. It goes beyond that to post-purchaseexperience, customer retention, cross selling and more.

Once a sale is made, companies should not sit back and lose the opportunity of con-verting a customer into a customer for life. E.g. a company representative may calla customer a week before the warranty period is over and offer to rectify any problemsthat may have cropped up. This is an opportunity not only to remind the customer thatyou care but also to create referrals, repurchase or sell a related product/ service.

Customer Relationship Management moves beyond customer satisfaction to cus-tomer delight. If a travel agency were able to offer a family a holiday to the right place,at the right time at the right price. If they could arrange for an extra bed for the 5-yearold without being asked and even get a pizza delivered at the doorstep when the familyreturns from the holiday, too tired to cook. In the process it would ensure not only alifelong customer but also a loyal ambassador.

It should, however, be kept in mind that CRM does not mean having a call centeronly; it does not mean having just a database of consumers for sending direct mail orestablishing just a social relationship with the consumer or for that matter having aneternal price-discount procedure. For all these to make any sense, appropriate strategiesshould also be in place.

NEED AND IMPORTANCE OF CUSTOMER RELATIONSHIP MANAGE-MENT

Markets worldwide have become more and more competitive. Consumers today de-mand a continually expanding range of options, models, types, sizes, colours and cus-


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Categories: The scope of product and service offerings for each customer should bede ned. Companies can decide to sell only what they make, or what their customersthink appropriate to buy from them.

Capabilities: The range of capabilities that will exist in a company, like process, tech-nology, people and knowledge/ insight, need to be planned. These would be needed toidentify the best customers, see how they are doing, predict what they will buy next, etc.

Cost, Pro tability and Value: Customer pro tability, customer costs and customervalue perceptions need to be focused on. A company may sell a product even at a lossto better the overall relationship.

Control of Contact to Cash Process: Time should be made one of the key metrics in thecompany- the time taken to go to market, to get an order, to get a product to a customeron receipt of an order, etc. Collaboration and Integration: A customers technology, people and business should be

integrated with the companys to fully implement Customer Relationship Management.

Customization: Individual customers should be engaged and the value that they wantshould be provided to them.

Communications, Interaction and Positioning: Two-way communications should betailored to the customers ears and actions. Communication is the most important aspectof marketing. Communication need not be creative; it needs to be relevant to the contextof each customer.

Customer Measurements: Time for each aspect of customer engagement (inquiry,order ful llment, cash remittance, etc.) should be measured. The pro tability of eachcustomer should be tracked, and the best, average and worst customers identi ed, and

decide who to invest in, who to reward, who to discard, etc. Customer satisfactionsshould also be tracked with metric and year-to-year comparisons made.

Customer Care: A customer care philosophy should be developed throughout the orga-nization, which dispels the notion that customer service is only after-sale.

Chain of Relationships: A company should ensure that employee relationships alignwith customer relationships.


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MODELS OF CUSTOMER RELATIONSHIP MANAGEMENTThe Customer Relationship Cycle Model

This model is also known as the A-CLASS Model, consists of the following sequenceof steps- Analyze, Connect, Learn, Act, Sell and Satisfy.

Analyze: The cycle begins with an analysis of the brand (what category it competes

in, what value it delivers, etc.), and the demographics, psychographics as well as thespeci cs about individual customers.

Connect: This includes building a database by systematically collecting or buying in-formation about consumers of ones brand, and competing brands in the same category,from advertising, inquiries, sales outlets, etc.

Learn: The cycle continues with continually revising and re ning the demographicand psychographic information database and identifying trends, patterns, buying cycles,etc; creating customer pro les, and mapping the lifetime value of different customers.This information is then used to prioritize the value of every customer and decide howmuch can be invested in her.Act: Once the present and potential customers have been identi ed, something has to

be done to make them feel special and valued, which would form the beginning of along-lasting relationship.

Sell: This becomes easy once everything else is in place. Companies can actually in-crease the value to customers by cross-selling. The Customer Relationship Management

program of AA is an example of the same.

Satisfy: Companies must use the opportunity to convert a one-time customer into acustomer-for-life, by actively seeking to satisfy, rather delight the customer after thesale has been made.

The Customer Relationship Timeline Model

The Relationship timeline is a model to map relationships. This is done by system-atically using all the information available about a particular customer. Every possiblesource of information is integrated into it.

The Basic Timeline: Almost every customer moves through several stages of her rela-tionship with the company, from Unaware to Aware to Informed to Interested toInvolved to Prospect to Customer to Evangelist. Tracking of the stage each con-

sumer is passing through is important because each stage requires a different approachand a different communication.


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Segmentation: Once a basic program for tracking and mapping Relationship Timelineis in place, the next step is to superimpose segmentation information on it.

To build such a database requires an enormous amount of dedication, attention todetail and commitment. However, a scheme which uses Timeline information can lead

to highly effective communications, which can move an individual up the relationshiptimeline. It can also track the success of the communication and subsequently re ne and

ne-tune it as well as make it more cost effective.

Customer Response, Retention and Valuation Model: The RFM Model

The RFM model ranks customers on three attributes- Recency, Frequency and Mon-etary Value of purchase. It involves tracking customer records so that customers whohad bought the most recently, most frequently and spent the most money, are labeledas the best, while those at the bottom of the list are labeled as the worst. The groupthat ranks as best in all three categories is most likely to show the highest response andsales rates, while the opposite is true for low RFM customers. Thus RFM techniqueshelp in calculating the LTV (Lifetime Value) of customers, which can be used as a proxyfor the future pro tability of the business. High RFM customers represent future busi -ness potential, because the customers are willing and interested in doing business with acompany, and have a high LTV. These are the customers the company needs to focus on,in terms of building close relationships with. Low RFM customers represent dwindling

business opportunity, a low LTV, and something needs to be done with these customersto increase their value.

The KAM Approach

KAM is an approach to business development, based on an understanding of the stra-tegic value of Key Account Management (KAM). This approach is particularly usefulin the business to business markets. The emphasis is placed on the pro t earned throughaccount retention and development, i.e. by placing emphasis on account lifetime val-

ue. Under this approach, success is not measured in terms of transactions, but in termsof the quality and longevity of collaboration. The approach has emerged as a leadingmanagement issue in recent years, as organizations have now understood the impor-tance of building closer and mutually bene cial relationships with customers. The pointof contact between supplier and customer has changed from being focused on a limitednumber of personnel in case of traditional sales based approach to a larger number now.

TECHNONOLGY AND CUSTOMER RELATIONSHIP MANAGEMENT: E-CRM

The Internet doesnt just provide a better, faster and more ef cient way of doing busi -ness. It is rede ning commerce, creating new industries, and changing how we reach


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across business, social, political, and geographic boundaries. It is creating new ways ofworking, communicating and organizing businesses itself.

The web has lead to decreased cost of doing business, increased revenues, and pro t -able relationships. These three are not exclusive of each other e.g. a better relationship

will also lead to cost savings and increased revenues too. Even then, not many organiza-tions in India have deployed a serious Internet strategy.

The web is ideally suited for developing and managing complex relationship manage-ment programs that result in customer loyalty and create high switching barriers for thecustomer, and even high entry barriers for the competitors. Management of such rela-tionship management programs may often be impossible through other media.

Bene ts offered in respect of building relationships with the customers

Once a good website is in place, an organization can know a lot about its customers,there likes, dislikes, their needs, values and problems. Often this interaction providesdata better than a lot of research. The database hence acquired is of immense use, andactually constitutes the rst step of successful Customer Relationship Management. Butone should keep in mind that it is not just a matter of having a website in place, ratherit is about how the web strategy is integrated with the overall way of doing business.

Web provides an ability to access worldwide audiences at costs that wouldnt have been dreamt of before. The access on one hand helps an organization in acquiring newcustomers at reduced costs, and on the other hand helps in staying in touch with the oldcustomers.

The web can be used very effectively to create brand awareness and communicatedeep knowledge about a product/service. Hence the customer would have easy accessto all the information he requires, and would not have to take the trouble of searchingfor the same.

The web allows for a real time response while the prospect is still hot. This ensuresthat the customer does not have to wait for his doubts to be cleared and his problems aresolved immediately in real time, e.g. the chat site created by Fabmart.

By delivering enhanced customer support, service and customization, an organizationcan achieve added customer satisfaction, and potential future revenues either from thesame person or through referrals. Thus, word of mouth publicity can also be enhancedthrough a successful and meaningful web strategy.

Another advantage that web can provide is through cross selling of products- a prac-

tice that is being successfully implemented by Amazon.com.


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An organization can improve their chances for online success if they:

Promote ease of navigation; making it simple for customers to shop at the store andnd the items they want- making the entire shopping experience fun and fast.

Incorporate value-added services, like gift reminders and address nders to stimulaterepeat purchases. E-Commerce (in business to consumer) should necessarily have a fo-cus on value bene ts. Value in this context could be the additional price discount offered

by the e-store. Hence there is a need to combine information oriented non-transactional programs with low price strategies.e.g. Amazon.coms prices are 30-40% lower than those associated with brick and mor -tar stores.

Provide superior customer service that exceeds the customers expectations.

Facilitate rapid checkout through storing of customer pro les and buying histories andinclude features such as wallets that add to ease of purchasing.

Excitement in the form of exclusive launches may be required to keep online custom-ers coming back to the store.e.g. Fabmart recently had an exclusive online launch.

Tying up an e-commerce site with original content is one de nitive way to satisfy theaudiences. And ensure that an organization does not necessarily sell at low-prices alone.

E-stores could expand their product categories even at the cost of focus as repeat cus-tomers can spread the word-of-mouse through referrals. A 5% increase in customer-retention leads to a 25-30% increase in pro ts, and hence CRM in this context shouldshow great care in segmenting customers and customizing offerings for these microniches.e.g. Amazon.com sells books, music, grocery and gift items and has an infrastructure to

deal with 16 million stock keeping units.

To conclude, an ef cient and effective use of IT in Customer Relationship Manage -ment results in continuous consumer contacts. It is useful to track customers satis-faction, measure attitudinal changes, scale preferences relating to product design andreview marketing effectiveness regularly to delight target consumers.

INTERNATIONAL SCENARIO

In the West, Customer Relationship Management has become a very evolved andspecialized concept, with a lot of agencies offering consulting in this eld. Severalorganizations have seemed to perfect this art and adopted excellent Customer Rela-


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ing. Companies have started feeling the crunch. In recent times, quite a few Indiancompanies have taken to Customer Relationship Management in some form or another,though many of these are in the services sector. The hotel industry has traditionally beenfollowing Customer Relationship Management. Banking services and the retailing sec-tor are other industries leading in the practice.

Some consumer durable/ electronics marketers in the premium segment are also tak-ing to this tool to retain their existing customer base. This sudden need to get back to

basics is explained by the fact that volumes in the premium segment are limited; and product offerings are sophisticated, technologically advanced, and almost of the samequality. So, it is the companys attitude toward the customer that will ultimately tiltthe balance in its favor. An example in this case is BPL, which has set up a club calledWavelength for its microwave owners Its members have regular interactive sessions,discussing various uses of the product, new recipes, best ways to use the product etc. Itis a part of the value added services that the company offers to its customers.

Citibanks life-stage marketing, Apollo Tyres The Apollo Membership Center, In-dian Airlines and Air Indias frequent yer program and Glaxo Indias Doctors da -tabase approach shows efforts for retention and better customer relationship manage-ment. Members of Sony Club, Discovery Club, Essar Club, etc. enjoy certain servicesand products at concessional rates. Usha International offers a privilege card and OrissaCement Ltd. has developed a database for direct marketing. A number of companies likeICI, Discover Channel, HDFC, General Motors, Mafatlal, American Express, EurekaForbes, Xerox, Motorola, Lakme, IBM, Wipro, Infosys and TCS, etc. have sharpenedtheir competitive edge with the help of Customer Relationship Management in India.However there is no speci c theoretical model which companies seem to be following,what they are following is overall company growth. Costs still remain a very importantconsideration; though some do focus on the long-term bene ts.

While most companies have begun Customer Relationship Management, they haveonly scratched the surface of what this notion implies- offering freebies and discounts,

entertainment, holiday trips and the like. No doubts that these frills help in making thecustomer think twice about switching brands. But they merely smack of discounts and price-offs. For a relationship to actually translate into long-term pro ts, it has to be sus -tainable in the long run. Companies need to calculate and focus on the lifetime value ofcustomers for which they need to understand them better.

Following are the details of the CRM practices of some companies we studied.

Maruti Suzuki India Limited

Maruti Suzuki India Limited (earlier known as Maruti Udyog ltd. (MUL) was a 40:60Joint Venture between the Government of India and Suzuki Motor Corporation of Ja -


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pan), started off in 1982. For years, MSIL was the market leader in the small-sized carsegment, with its Maruti 800 model. In 1998, the competition in the Small and medium-sized car markets intensi ed, with the entry of Hyundai Santro, Daewoo Matiz, FiatUno, and Tata Indica.

MSIL prides itself in transforming the concept of after sales service in the Indianautomobile industry. It is committed to the philosophy of ensuring that its relationshipwith the customer does not end with the purchase of the vehicle. From its inception ithas been committed to providing an excellent network, that would facilitate its custom-ers in purchasing vehicles, accessing spare parts, and getting their vehicles serviced. Ithas built up the largest network of showrooms, dealer workshops, and authorized ser-vice stations, in India, to ensure that no matter where you go, you are never far awayfrom a Maruti authorized Service Station.

Recently, it ranked rst in the 2007 JD Power Customer Satisfaction Study, 4 index points above the industry average. It is the only company to consistently rank above theindustry average, and the only market leader to rank the highest in terms of CustomerSatisfaction. It re ects the companys continuous efforts to work with dealers to im -

prove customer satisfaction.

Maruti provides its customers with a 24 Hour On-Road Service in various citiesacross India, including Bangalore. If a customers car breaks down anywhere, he cancall up a mobile number for help. It also runs a free check up camp facility for Marutiowners. The company has reduced the complaint redressal time from the previous 30days to 10 days to 8 days at present.

The company tries to reach its customers through its website. It answers queries,collects feedback, and personal information of its customers, and uses the informationgathered to build a database, which could then be used for market research.

It recently launched the Institute of Driver Training and Research (ITDR) in Delhi,

which has been set up on international standards and is Indias rst ever driver-traininginstitute incorporating the latest technologies.

MSIL has also launched a pilot Customer Information Centre for Delhi and Gurgaoncustomers, through an outsourced Call Centre Partner (GE Capital). The customer hasthe facility of calling up a toll free number, and get information on models, prices,

nance options, dealer and service center locations, service related queries, and evenlodge complaints which would be redressed by regional Of ces and Dealers in the city.This is in line with todays approach to customer relationships which demands person-

alized customer interactions through primary focus on needs of customers throughoutthe lifecycle of products and services.Besides these, the company also regularly sponsors carnivals, car rallies to keep in


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regular touch with its users.

Hyundai Motors India Limited

Hyundai Motors India Ltd. rolled out the rst Santro- its largest selling car in 1998.

Since the very beginning, the companys policy was to make the customer feel thatwhen he bought a Santro, he didnt take a car, but actually a relationship, home. Thus,all the initiatives of the company are customer focused, and aim to make their life sim-

pler.

Regular training to employees is provided by HMIL. The training is not only techni-cal training, but also on handling of customer grievances, and dealing with customers.When a customer walks in a Hyundai showroom he is properly greeted and made tofeel comfortable. The sales person speaks about the product, various features and thecorresponding bene ts, and then discusses the issue of price. Incase the customer wantsa comparison with a product of another company, all the details are provided. On pay-ment, customers are given the delivery immediately. Incase the customer asks for a

particular color which the dealer does not have, then the dealer keeps in touch with thecustomer, and keeps him informed. Normally, most of the customers go in for nanceschemes. The dealers follow up with the nance company and ensure that the nanc -ing is through. The dealers act as a mediator between the nance company and thecustomer. The dealer collects the application document, checks the IT returns and doesother related jobs and ensures that the transaction is done fast.

Hyundai Motors India Ltd. writes letters to the customers asking for feedback re-garding dealer service, presale service, after sales service, complaints etc. Hyundai hasappointed a National Customer Care Manager for this purpose. Hyundai gives enoughfreedom to its dealers with respect to replacements. If a dealer is convinced that a par-ticular part is defective, he has the freedom to replace it without referring to the com-

pany. The policy underlying this is that the customer should not be put through any kindof hardship. Other companies have formal procedures. Dealers have to refer back to the

company and take its consent before taking any such decision.

With respect to servicing, for every eight vehicles there is a service advisor. As thenumber of vehicles increases, the number of service advisors and workers in the work-shop also increases. Dealers have a database starting from the point of sale. The data istransferred to the workshop. They can always track back when the vehicle came for rstservicing, what was the mileage then, any repairs in between, etc.

The dealers keep track of the customers for the rst 6 months after the time of pur -

chase. They would send two- three persons every alternate month to each and everycustomer to know if they are facing any problems etc. This is not only to check whetherthe customers are satis ed with the product but also to look for possible references


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(prospective customers) from existing customers.

The dealer acts as a mediator when a customer wants to upgrade and wants to sell hisold car. The company ensures that the customer gets the best price.

Hyundai, even during the sale of the vehicle involves the service people. This buildsa rapport with the customer right in the beginning. So the customer knows in case ofany service requirement whom to contact. Many car companies have a sales and servicecenter at different locations. But this is not the case with Hyundai. With a service cen-ter at a different location, the customer does not get the desired attention. But since atHyundai the customer has been introduced to the service people in the beginning itself,he feels quite comfortable. He would get the same attention from a service person asfrom a sales person. As a result, customer complaints are resolved within 6-8 hours onan average.

An important feature of Hyundais customer service is the 24-hour helpline. As partof this service, a customer can call up Hyundai helpline at any point of the day for as-sistance in case his car breaks down, anywhere. Another important feature is the optionof extended warranty. A standard 2-year warranty is given to all the customers. Beyondthat, a warranty for the third year could also be availed if the customer so desires, at avery nominal cost.

All the above initiatives taken by HMIL, and its dealers, who have successfully incul-cated the culture and philosophy of the company into their working, have resulted in avastly satis ed customer base. Because of it persistent efforts to improve and evolve itscustomer service practices, HMIL, recently won the award for best customer servicesfrom Hyundai International.

MARKET POSITION

A In recent months, however, Maruti Suzuki India Limited (MSIL) has been losing

its share to its archrival Hyundai, in the Bangalore city, with the bookings and sales ofthe Hyundai Santro outnumbering Maruti Zen sales. Hyundais initial break came withthe Supreme Courts strict Euro II emission norms, which caught Maruti off-guard. Su-

perior technology (The Tall-Boy design) and aggressive advertising (Featuring Shah-Rukh Khan, and the cola-type advertisements directed against Maruti) further boostedits sales. Coupled with its superior services and customer care initiatives, Hyundai salesincreased challenging Marutis position as the market leader.

Customer Survey Analysis

Though Maruti has taken several initiatives under its Customer Relationship Man-agement programme, and even won an award in respect of customer satisfaction, our


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survey reveals that vis--vis Hyundai Motors, customer satisfaction still remains at alow level. Though many of the customers do appreciate its services, reliability and lowcosts, there are many others whose expectations have not been fully met. The following

points merit attention:

Though the stated service time has been reduced to 7-8 days, there are many instanceswhere there have been glaring delays.

Even when complaints have been redressed within the stated time period, customers believe that this period could further be shortened, based on the experiences of ownersof other brands of automobiles.

Some dealers have been found to be very uncooperative and their services have beenfound lacking.

There have been instances of dealers overcharging the customers.

There seems to be a lack of attention to detail, both in terms of the work done or theservices rendered.

The 24-hour anytime-anywhere facility is not really an anytime service.

There is a lack of adequate contact with the company, and no real correspondence orcommunication with the company on a regular basis.

Thus the perception of MSIL is that it is more of a business-oriented than a customeroriented company. There is no perceived pride in being a Maruti-owner, or a feelingof belonging to a fraternity of Maruti drivers. Not many people interviewed wanted to

purchase any of the Maruti models as their next car, even though it offers a wide rangeof choices like Zen, Wagon R, Alto, Esteem and Baleno, which are technologically at

par with many of the competing brands.

On the other hand, Hyundai seems to have succeeded in its policy of when you takehome a Santro, you are actually taking home a relationship. Customers in our surveywere fully satis ed with their car company and the dealers and many of them intended

purchasing a Hyundai car as their next vehicle also. The following points can be high-lighted.

Hyundai dealers offer prompt and reliable services. They are extremely cooperativeand courteous and take a lot of pains to ensure customer satisfaction.

Hyundais 24-hour help line is extremely ef cient.The extra bene ts like free extra guarantee of six months, automatic insurance on pur -


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chase of the car, rst-aid kit included in the car, delivering the car wrapped like a gift,etc. are appreciated by the customers.

The company keeps in constant contact with the customers, calling them once in everytwo weeks, and sending the feedback forms once in every two months to get customer

responses. This adds to the feeling of belonging and pride in owning a Hyundai.

It seems that Marutis market has become so large that it does not bother about one ortwo customers. Hyundai, because of its newness to the market and the limited volumeshas been able to pay more attention to and take greater care of its customers. For themevery customer is important. It has thus succeeded in differentiating itself in terms ofcreating and retaining relationships with its customers.

RECOMMENDATIONS FOR MSIL

Marutis biggest strength is its extensive network of dealers, showrooms and servicestations. The Maruti 800 is still the rst choice of rst-time car owners. MSIL offers awide range of choices from the Maruti 800 in the small-size car segment, to the Zen,Alto and Wagon R in the small-medium segment, to the Maruti Esteem in the mediumsegment to the Baleno in the premium segment. It thus offers a wide range of productsacross all price segments, thus making relationship management all the more importantfor the company, with respect to purchase of second cars and upgradation by existingcustomers.

For this the company needs to develop a non-transactional orientation. Hence, it needsto shift focus from a one-off transaction to a combination of strategies, which build therelationship between the MSIL and its customers over a period of time. It should also bewilling to invest in infrastructure to implement and operationlise CRM.

Focus: The broad objective of MSILs CRM strategy should be to develop a senseof belonging to the fraternity of Maruti-owners and a lifelong relationship with the

company. Owning a Maruti should be a thing of pride. There should be a philosophy ofcustomer care and customer service to ensure a delighted and loyal customer-for-life.The company and its dealers should go out of their way to deliver extra value to thecustomer so that he is not just satis ed, but delighted as well.

The following strategies can be implemented:

Better management and selection of Dealers: As evident from the customer survey,certain dealers do not conform with MSILs philosophy of customer care, leading to

unsatis ed customers and bad word-of-mouth. Care should be taken to ensure that eachdealer fully understands the importance of customer service and customer satisfactionand promptly deliver the same to the consumers.Dealers personnel may be trained by


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and its customers.Anywhere-Anytime Service Facility: Though this service is offered inmany cities, customers still experience dif culties, as it is not always easily available.The company should show a dedication to this concept and invest in making this facil-ity available in all major cities at all hours and at any location. The number of servicingvehicles may be increased to minimize the time taken to respond to any request.

Going an extra mile: Certain initiatives can be taken to exceed customer expectationsand deliver extra value to them. To enumerate a few, new cars may be delivered to thecustomers doorstep wrapped like a gift, including some extra gifts and a congratulatorycard.The service centre may pick up and deliver a car to the customers doorstep.Thecompany could provide a guarantee of the maximum time of servicing cars, which ifexceeded would entitle the customer to a discount on his bill.The company dealers may

be asked to keep a track of the birthdays and anniversaries of their customers and sendthem greeting cards on these occasions.

Increase Online facilities: Though MSIL already uses its web site to keep in touch withits customers, it must exploit all the opportunities that the Internet has to offer to createand maintain relationships with its customers and increase the online facilities providedto them.It can use its website to integrate its dealers, service centres and customers tocreate an online community. The website may contain the names, addresses, telephonenumbers and links to websites of all its dealers and service centres city-wise, so that itis easy for a customer to chose one that is most convenient for him.The content may

be enhanced to provide information for better maintenance and use of their cars to getmaximum bene ts from its use.

From time to time, special offers/ discounts on new models, accessories/ servicesetc. could be offered through this website to the members.Online chat facilities may beintroduced so that customers queries can be answered real-time.Each customer may be

provided a particular identi cation number, so that the company may keep track of thehistory of each members visit, which would provide invaluable information about hislikes and preferences.Though the concept is still underdeveloped in India, over time, the

website can be used for online selling and booking of cars.

Single-Point Focus: MSIL must try to provide its customers with a one-stop shopfor any car purchaser. At the same contact point, a customer may get a loan for nanc -ing purchase of the car, an RTO permit, as well as auto insurance. For a company likeMSIL, providing this facility would be easy, being partly owned by the government.

The Customer Information Centre: Management of Customer Relations: The CIC atDelhi is a good initiative for the management of customer relations. MSIL should try to

open similar centres in other cities as well, and offer greater services through them. Fore.g. On the basis of customer requirements, the operators could recommend a model, a

nance plan, put him in touch with a loan agency, the nearest dealer, etc. Furthering the


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concept, the operators may also provide information on the deals and models offered by competitors, how they compare technologically, etc. and help the customer make aninformed choice.

The Institute of Driver Training and Research: The ITDR is also a great avenue for

building and maintaining relations with customers. Since most learners are rst-timecar users, it is an ideal way to get in touch with actual users, understand their needs andrequirements and suitably customize communication to suit the same. Similar institutesneed to be opened up in more cities.

THEORETICAL CONTRIBUTION

Our broad recommendation is that managers should investigate using CRM to lever-age relationship activities. However, it is recognised that there are a number of alter-native CRM approaches that can be applied for automobile companies. Based on theacademic literature and practice within the CRM area we believe that there are ve

broad types of CRM programs that can be used, and each will impact on the level ofleveraging required. In all these cases, we provide examples of situations where main-taining continuous relationship has served as the basis for a CRM-leveraging program.

PRACTICAL CONTRIBUTION

As can be observed from the present research study, the CRM programs are based onfour issues: What type of consumer is targeted (existing or new)? What type of customeraction is required (purchase or secondary action)? What is the rms nancial commit -ment (unlimited or capped)? What leveraging activities are required?

Broad-based CRM programs are the most basic form of CRM. In this way the programtargets all types of consumers (existing and new). Advertising is required for a lever-aging activity. Although other promotional activities can also be used, which include

packaging information and/or point of sale information about the program. Leveraging

in promotion may also be used to update consumers, and thus strengthen the rm-causelinkage.

A limited CRM program is a restricted version of the broad-based program that usu-ally targets both new and existing customers. All this information would be incorpo-rated into the ne print, although if a cap is set too low it may appear that the rm isexploiting the linkage between the rm and cause.

Market-focused CRM programs allows the rm to target speci c types of consumers.

This may involve targeting new segments by selectively promoting the CRM program(Meyer, 1999). Alternatively it might involve targeting new customers, although the

rm would need to identify sales to new customers. It may be dif cult for some rms


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to identify such sales and thus these programs might be limited to less frequently pur-chased goods.

Market-focused programs can be capped or uncapped and require rms to undertakevery targeting leveraging activities that access these new consumers. Targeting new

segments may also involve secondary behaviour.

Replacement CRM programs allow rms to replace sponsorships and philanthropicgiving with sales triggered giving. These can be aimed at new or existing customers, butare usually targeted at all types of customers.

Multi-phase CRM programs have been discussed to some extent above. These pro-grams require that consumers purchase a good and then undertake a secondary activity,like post in the products barcode. They can be aimed at either new or existing consum-ers and can be unlimited or capped in nature. They require advertising and sales promo-tion to facilitate the secondary behaviour.

Thus rms have a diverse range of strategic options when choosing to use CRM ac -tivities. The most appropriate options will of course depend on the strategic objectivesthat are to be achieved and assumes there is an appropriate rm-cause link. In additionlike all promotional activities the effectiveness of the program will be dependent on itsimplementation.

MANAGERIAL IMPLICATIONS

In this paper we have overviewed how companies can identify whether they cancombine sponsorship with CRM. This paper has highlighted the potential for CRM

programs to be used to leverage sponsorship activities better. Thus, there needs to beadditional research to examine a diverse range of issues. Any examination of the ef-fectiveness of CRM programs also needs to take into consideration a range of potentialmoderating factors including: the perceptions of sincerity, involvement with cause and

product, perceived impact on the cause. As such any experiment would need to be suf-ciently complex to examine or at least control for these factors.

The research study shows that CRM positively impact on understanding consumersand targeting, customer satisfaction and customer retention. In-depth interviews withautomobile companies have revealed that in practice database marketing facilitates,customer understanding and targeting, which is the base of CRM; Internet could bringenhanced customer satisfaction to CRM though one to one interactive marketing pro-vided that customer private information is well managed, and hence certain degree of

customer retention.

Managerial implications could be drawn from this study. Firstly, to understand con-


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sumers, which is one of the most important aspects of CRM, companies may applycomputer database to get customer preference information more ef ciently, and therebyto target more accurately. What should be noted is that how to let customers controltheir data and how enterprise can safeguard it from third parties need to be taken intocareful account in order to protect consumer privacy to forge their trust. In addition,

companies can establish one to one relationship with consumers by utilizing the datacollected, i.e., to provide tailored offerings for consumers according to their preferenceand needs. Thus customer satisfaction could be enhanced, which will result in positiveword of mouth and certain degree of customer retention. However, companies need to

bear in mind that CRM does not lead to customer loyalty all the time, other variableslinking with loyalty, such as consumer buying behavior, need to be taken in to accountwhen forming CRM strategy.

Theories applied to CRM have been rooted in satisfaction/dissatisfaction theoriesand theories for customer complaining behavior that has been proposed by traditionalmarketers. This study also investigated models for customer satisfaction and complain-ing behavior that examine factors affecting customer relationship management. This

paper focuses on the how to maximize customer satisfaction for successful CRM be-cause it provides clues as to what managerial changes might have induced different andmore desirable behaviors, raising the issue of customer loyalty myopia. This myopiastems from believing that consumer behavior can be created and sustained in and byitself without careful regard to its underlying basis on the customer satisfaction side,reviving the long-standing marketing dilemma of attitude and behavioral measures, andhow much attitudes in uence or predict behavior. This study also examined studies thataddressed the importance of customer complaints that also go beyond the customersatisfaction concept and much more deeply into the underlying theories and modelsthat attempt to explain why people may or may not be satis ed. This study suggestedthe ways to maximize customer satisfaction, such as improving customer loyalty andresolving customer complaints.

This study provides implications for both academics and practitioners. Future study

will be needed to investigate mode of online customer satisfaction that are proposed byFournier and Mick (1999), including satisfaction-as-contentment, satisfaction-as-plea-sure, and dissatisfaction-as-surprise. Future research exploring consumer satisfaction of

pure-play vs. multi-channel is also likely to be fruitful. Other issues that increase thelevel of relationship between or within online customers and businesses will also be afuture research. Efforts toward the effective resolution of customer problems serve asthe basis for long-term product and successful CRM.

CONCLUSION

Customer Relationship Management is a very broad and extensive eld. This subjectcannot be dealt with in suf cient detail in a report of this magnitude. It is the process of


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building long-term, trusting, win-win relationships with customers, distributors, dealersand suppliers. However, we have limited the scope of this report to Customer Relation-ship Management (CRM), and concentrated on the process of establishing, maintaining,enhancing and commercializing customer relationships.

The concept of CRM is slowly but surely evolving in India, where on one hand manycompanies have taken several initiatives and achieved a lot of success in this area, whileothers are waking up to its challenges, thanks to the evolving market scenario.

Customer Relationship Management is now giving way to Experiential market-ing, where the experience stems right from the purchase stage, to using the product, todumping the used product. Therefore, it is not just the tangible and intangible bene ts,

but also the overall experience which in uence the purchase decision. Today, a brandsduty is not just need ful llment but experience satisfaction.

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Submitted: 25 May 2009 Revised version submitted: 15 June 2009 Accepted: 25 June 2009 Double-blind refereed anonymously

Author(s) Information:

Sajal Kabiraj is a Post Doctoral Fellow, PhD, MS, MBA, Bachelors in ChemicalEngineering and is now employed with Skyline University College, UAE. He obtainedhis PhD from Indian Institute of Information Technology & Management, Gwalior, In -dia (An Apex Govt of India Institute) and Masters in International Logistics and SupplyChain Management from Jonkoping International Business School, Sweden. He is alsothe recipient of ICFAI Best Teacher Award 2008 for teaching and research excellence.He has published numerous papers in international refereed journals and has taught atthe post graduate level in universities in Sweden, Germany, Austria, Malaysia, Canada,USA, UAE and India. He is also a registered PhD supervisor.

Joghee Shanmugan is now working with Skyline University College, UAE. He ob-tained PhD degree from Bharathiar University, India and did his MBA from Bharathi -dasan University. He was teaching various Marketing, Systems and Quality Manage-ment papers at the post graduate level. He has also a good number of international

publications and he is a registered PhD examiner for many reputed universities.

1 Sajal Kabiraj Joghee Shanmugan

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