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INTRODUCTION TO CRM
Evolution of CRM
Customer Relationship Management (CRM) is one of those magnificent concepts that swept
the business world in the 1990’s with the promise of forever changing the way businesses
small and large interacted with their customer bases. In the short term, however, it proved to
be an unwieldy process that was better in theory than in practice for a variety of reasons. First
among these was that it was simply so difficult and expensive to track and keep the high
volume of records needed accurately and constantly update them.
In the last several years, however, newer software systems and advanced tracking features
have vastly improved CRM capabilities and the real promise of CRM is becoming a reality.
As the price of newer, more customizable Internet solutions have hit the marketplace;
competition has driven the prices down so that even relatively small businesses are reaping
the benefits of some custom CRM programs.
In the beginning…
The 1980’s saw the emergence of database marketing, which was simply a catch phrase to
define the practice of setting up customer service groups to speak individually to all of a
company’s customers.
In the case of larger, key clients it was a valuable tool for keeping the lines of communication
open and tailoring service to the clients needs. In the case of smaller clients, however, it
tended to provide repetitive, survey-like information that cluttered databases and didn’t
provide much insight. As companies began tracking database information, they realized that
the bare bones were all that was needed in most cases: what they buy regularly, what they
spend, what they do.
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Advances in the 1990’s
In the 1990’s companies began to improve on Customer Relationship Management by
making it more of a two-way street. Instead of simply gathering data for their own use, they
began giving back to their customers not only in terms of the obvious goal of improved
customer service, but in incentives, gifts and other perks for customer loyalty.
This was the beginning of the now familiar frequent flyer programs, bonus points on credit
cards and a host of other resources that are based on CRM tracking of customer activity and
spending patterns. CRM was now being used as a way to increase sales passively as well as
through active improvement of customer service.
Customer Relationship Management - CRM
The generally accepted purpose of Customer Relationship Management (CRM) is to
enable organizations to better serve its customers through the introduction of reliable
processes and procedures for interacting with those customers.
In today's competitive business environment, a successful CRM strategy cannot be
implemented by only installing and integrating a software package designed to support CRM
processes. A holistic approach to CRM is vital for an effective and efficient CRM policy.
This approach includes training of employees, a modification of business processes based on
customers' needs and an adoption of relevant IT-systems (including soft- and maybe
hardware) and/or usage of IT-Services that enable the organization or company to follow its
CRM strategy. CRM-Services can even redundantize the acquisition of additional hardware
or CRM software-licences.
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The term CRM is used to describe either the software or the whole business strategy oriented
on customer needs. The second one is the description which is correct. The main
misconception of CRM is that it is only software, instead of whole business strategy.
Major areas of CRM focus on service automated processes, personal information gathering
and processing, and self-service. It attempts to integrate and automate the various customer
serving processes within a company.
In recent years however, several factors have contributed to the rapid development and
evolution of CRM. These include: -
1. The growing de-intermediation process in many industries due to the advent of
sophisticated computer and telecommunication technologies that allow producers to directly
interact with end-customers. For example, in many industries such as airlines, banks
insurance, software or household appliances and even consumables, the de-intermediation
process is fast changing the nature of marketing and consequently making relationship
marketing more popular. Databases and direct marketing tools give them the means to
individualize their marketing efforts.
2. Advances in information technology, networking and manufacturing technology have
helped companies to quickly match competition. As a result product quality and cost are no
longer significant competitive advantages.
3. The growth in service economy. Since services are typically produced and delivered at the
same institution, it minimizes the role of the middlemen.
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4. Another force driving the adoption of CRM has been the total quality movement. When
companies embraced TQM it became necessary to involve customers and suppliers in
implementing the program at all levels of the value chain. This needed close working
relationships with the customers. Thus several companies such as Motorola, IBM, General
Motors, Xerox, Ford, Toyota, etc formed partnering relations with suppliers and customers to
practice TQM. Other programs such as JIT and MRP also made use of interdependent
relationships between suppliers and customers.
5. Customer expectations are changing almost on a daily basis. Newly empowered customers,
who choose, how to communicate with the companies’ various available channels? Also
nowadays consumers expect a high degree of personalization.
6. Emerging real time, interactive channels including e-mail, ATMs and call centre that must
be synchronized with customer’s non-electronic activities.
7. In the current era of hyper competition, marketers are forced to be more concerned with
customer retention and customer loyalty.
8. As several researchers have found out retaining customers is less expensive and more
sustainable competitive advantage than acquiring new ones.
9. On the supply side it pays more to develop closer relationships with a few suppliers than to
develop more vendors.
10. The globalization of world marketplace makes it necessary to have global account
management for the customers.
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OBJECTIVE OF THE STUDY OF CRM
CRM, in its broadest sense, means managing all interactions and business with
customers. This includes, but is not limited to, improving customer service. A good CRM
program will allow a business to acquire customers, service the customer, increase the value
of the customer to the company, retain good customers, and determine which customers can
be retained or given a higher level of service. A good CRM program can improve customer
service by facilitating communication in several ways:
Provide product information, product use information, and technical assistance on
web sites that are accessible 24 hours a day, 7 days a week
Identify how each individual customer defines quality, and then design a service
strategy for each customer based on these individual requirements and expectations.
Provide a fast mechanism for managing and scheduling follow-up sales calls to assess
post-purchase cognitive dissonance, repurchase probabilities, repurchase times, and
repurchase frequencies.
Provide a mechanism to track all points of contact between a customer and the
company, and do it in an integrated way so that all sources and types of contact are
included, and all users of the system see the same view of the customer (reduces
confusion).
Help to identify potential problems quickly, before customer occur
Provide a user-friendly mechanism for registering customer complaints (complaints
that are not registered with the company cannot be resolved, and are a major source of
customer dissatisfaction).
Provide a fast mechanism for handling problems and complaints (complaints that are
resolved quickly can increase customer satisfaction).
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Provide a fast mechanism for correcting service deficiencies (correct the problem
before other customers experience the same dissatisfaction).
Use internet cookies to track customer interests and personalize product offerings
accordingly
Use the Internet to engage in collaborative customization or real-time customization
Provide a fast mechanism for managing and scheduling maintenance, repair, and
ongoing support (improve efficiency and effectiveness)
The CRM program can be integrated into other cross-functional systems and thereby
provide accounting and production information to customers when they want it.
Keeping Existing Customers
Grading customers from very satisfied to very disappointed should help the organization
in improving its customer satisfaction levels and scores. As the satisfaction level for each
customer improves, so shall the customer retention with the organization.
Maximizing Life time value
Exploit up-selling and cross-selling potential. By identifying life stage and life event
trigger points by customer, marketers can maximize share of purchase potential. Thus the
single adults shall require a new car stereo and as he grows into a married couple his needs
grow into appliances.
Increase Loyalty
Loyal customers are more profitable. Any company will like its mindshare status to
improve from being a suspect to being an advocate. Company has to invest in terms of its
product and service offerings to its customers. It has to innovate and meet the very needs of
its customers so that they remain as advocates on the loyalty curve. Referral sales invariably
are low cost high margin sales.
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RESEARCH METHODOLOGY
Meeting and satisfying each customer’s need uniquely and individually. In the mass
markets individualized information on customers is now possible at low costs due to the rapid
development in the information technology and due to availability of scalable data
warehouses and data mining products. By using online information and databases on
individual customer interactions, marketers aim to fulfill the unique needs of each mass-
market customer. Information on individual customers is utilized to develop frequency
marketing, interactive marketing, and after marketing programs in order to develop
relationship with high-yielding customers. In the context of business-to-business markets,
individual marketing has been in place
of quite sometime. Known as Key Account Management Program, here marketers appoint
customer teams to husband the company resources according to individual customer needs.
Continuity Marketing Programs
Take the shape of membership and loyalty card programs where customers are often
rewarded for their member and loyalty relationships with the marketers. The basic premise of
continuity marketing programs is to retain customers and increase loyalty through long-term
special services that has a potential to increase mutual value through learning about each
other.
Partnering Programs
The third type of CRM programs is partnering relationships between customer and
marketers to serve end user needs. In the mass markets, two types of partnering programs are
most common: Co-branding and affinity partnering. Missing process of CRM Traditionally
customer relationship management (CRM) revolves around the three functions of selling,
marketing and support. Various process models have been built around how these functions
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are integrated and operated in a customer oriented enterprise. There is however a fourth
critical function that is lacking in most CRM models.
The fourth function that often is the source of a competitive edge is that of innovation.
Companies must continually reinvent themselves to deliver an improved and often a totally
new value offering to their customer base. CRM must provide the customer intelligence that
feeds information back into the enterprise’s knowledge management processes where it can
trigger new innovation processes. When CRM is integrated into the innovation process,
significant value can be derived from faster time to market cycle times and with new
processes and services. Marketing automation must ensure that the innovation processes are
actually market driven. A market driven innovation process must include both strategies that
are focused on satisfying customer requirements as well as strategies focused at redefining
customer requirements. Sales automation should be integrated with the innovation process by
ensuring that all sales channels are prepared and ready to take new processes and services to
market before competitive forces can react. Customer service automation must be designed to
empower the customer with the option of assisting with the design of the value offering.
Redefining CRM around innovation, sales, marketing and service can identify new
competitive opportunities for an enterprise. The remaining question is whether companies are
prepared to take the initiative and expand the definition of customer relationship management
to include the process of innovation. The pressure to deliver results within the traditional
definition of CRM already overwhelms companies. The dialog must start rather earlier than
later because the competitive window of traditional CRM is decreasing and customer
demands for a more innovative and responsive enterprise will increase
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ARCHITECTURE OF CRM
There are three parts of application architecture of CRM:
1. Operational - automation to the basic business processes (marketing, sales, service)
2. Analytical - support to analyze customer behavior, implements business intelligence
alike technology
3. Collaborative - ensures the contact with customers (phone, email, fax, web, SMS,
post, in person)
1. Operational CRM
Operational CRM means supporting the "front office" business processes, which
include customer contact (sales, marketing and service). Tasks resulting from these processes
are forwarded to resources responsible for them, as well as the information necessary for
carrying out the tasks and interfaces to back-end applications are being provided and
activities with customers are being documented for further reference. Operational CRM
provides the following benefits:
Delivers personalized and efficient marketing, sales, and service through multi-
channel collaboration
Enables a 360-degree view of your customer while you are interacting with them
Sales people and service engineers can access complete history of all customer
interaction with your company, regardless of the touch point.
2. Analytical CRM
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In analytical CRM, data gathered within operational CRM and/or other sources are
analyzed to segment customers or to identify potential to enhance client relationship.
Customer analysis typically can lead to targeted campaigns to increase share of customer's
wallet. Examples of Campaigns directed towards customers are:
Acquisition: Cross-sell, up-sell
Retention: Retaining customers who leave due to maturity or attrition.
Information: Providing timely and regular information to customers.
Modification: Altering details of the transactional nature of the customers'
relationship.
Analysis typically covers but is not limited to:
Decision support: Dashboards, reporting, metrics, performance etc.
Predictive modeling of customer attributes
Strategy and Research Analysis of Customer data may relate to one or more of the
following analyses:
Contact channel optimization
Contact Optimization
Customer Acquisition / Reactivation / Retention
Customer Segmentation
Customer Satisfaction Measurement / Increase
Sales Coverage Optimization
Fraud Detection and analysis
Financial Forecasts
Pricing Optimization
Product Development
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Program Evaluation
Risk Assessment and Management
Data collection and analysis is viewed as a continuing and iterative process. Ideally,
business decisions are refined over time, based on feedback from earlier analysis and
decisions. Therefore, most successful analytical CRM projects take advantage of a data
warehouse to provide suitable data. Business Intelligence is a related discipline offering some
more functionality as separate application software.
3. Collaborative CRM
Collaborative CRM facilitates interactions with customers through all channels
(personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and
channels. It is a solution that brings people, processes and data together so companies can
better serve and retain their customers. The data/activities can be structured, unstructured,
conversational and/or transactional in nature.
Collaborative CRM provides the following benefits:
Enable efficient productive customer interactions across all communications channels
Enables web collaboration to reduce customer service costs
Integrates call centers enabling multi-channel personal customer interaction
Integrates view of the customer while interaction at the transaction level
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BENEFITS OF CRM
1. Better service to customers:
With CRM the company can provide better service to its regular and valuable
customers. It is said that 20% of the customer account for 80% of the sales. Therefore
it is worth targeting the important customer and then to provide them sophisticated
service as compared to other customers.
2. Customize market offering :
Companies can customize a product or service depending upon the data available with
the firm. The firm can facilitate customer company interaction through the company
contact centre and web site. Such interaction helps to develop customized products.
3. Customer retention :
CRM emphasizes on training and development of employees to become more
customer oriented. Due to CRM training and development employees show care and
concern towards the valuable customers. Therefore the customer defection rate may
be very less.
4. Increase long term relationships:
Some firms treat their customers as partners specially in the case of B2B markets.
Firms solicit the help of customers to design new products or to improve their service.
If the customer gets involved with the firm he is more likely to remain with the firm.
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5. Increase customer equity:
The main aim of CRM is to produce high customer equity. Customer equity is the
sum of lifetime values of all cutomers. Firms focus the marketing efforts more on the
most valuable customers (MVCs). More focus on MVCs enable a firm to increase
customer equity.
6. Competitive advantage:
Firms that adopt CRM get competitive advantage in the market. They can face the
competition with much ease. Competitive advantage helps to generate higher returns
on investment.
7. Corporate image :
The image of the firm also gets enhanced. Loyal customers become evangelists. The
evangelists spread a good word about the company and its products. This enables a
firm to get additional customers to its fold.
8. Higher return on investment:
Due to CRM the company is in position to generate higher return on investment. This
is because of repeat purchase on the part of loyal customers. Also the company makes
money through cross selling(selling many products rather than single product )and up
selling (selling higher value products). The higher return on investment increases
shareholders value.
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CRM PLANNING
CRM Planning: Keys for Project Success
Whether you're updating, upgrading, jump-starting, or restarting your CRM efforts, some
basic steps will help keep you on the path to a positive ROI.
Thinking about the potential ROI of your customer relationship management (CRM) project
should start during the selection process. Before you write an RFP or start talking to vendors,
you need to do some homework to ensure that you're on the right track to maximize ROI.
Identify the Problem — and the Solution
Before you start thinking about vendors, you should define your problem in clear business
terms. Do you need to improve management visibility into the sales pipeline? Reduce
customer support costs or improve customer support? Reduce customer-related
administrative overhead? Making your CRM challenges specific will help you determine
which technologies or components are most likely to deliver ROI and how you can prioritize
your development and deployment plans. Most companies' CRM goals fall into a couple of
main categories:
• Improved sales performance
• Improved management visibility
• Improved customer support
• Improved marketing
• Reduced costs
If your CRM goals fall into more than two of these categories, you'll likely want to prioritize
one over the other and plan a phased deployment. It's also a good idea to know at this point
what your likely budget is, how flexible it is, and what your procurement officer or CFO will
be looking for in terms of business justification. If you know walking into the project that
you'll need to show a six-month payback period, for example, you can plan accordingly.
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Make the Short List
Regardless of your relationship with existing vendors, previous experience, and technology
environment, you should make a short list of potential vendors and give them a fair
evaluation before you make a decision. Your short list should be easy to define based on
these factors:
• Your CRM goals. The vendors whose functionality meets your needs will depend on
whether you're looking for improved sales, improved reporting and forecasting, improved
support, improved marketing, or a combination of different customer-related technology.
• Your existing environment and IT philosophy. Do you have existing databases, order
systems, or contact lists that will need to be integrated or migrated into your CRM solution?
Do you expect to do your own development or use consultants or systems integrators? Are
you comfortable outsourcing your sales and marketing data in its entirety - or in part?
Answering these questions will help you determine whether a large-scale CRM infrastructure,
a hosted solution, a point solution, or a broad solution is likely to deliver maximized ROI.
• Your user dynamics. Are the employees you expect to use the solution technology
savvy and open to change, or are they the ones still using pencils and paper to track leads?
The greater the magnitude of the change you expect them to make, the greater the risk that
adoption will slow the ROI of your project.
• Your budget. CRM solutions such as Siebel and SAP can cost millions of dollars to
deploy and require a team for ongoing support and maintenance. On the other end of the
spectrum, Microsoft CRM and Front Range (for example) can cost considerably less. You
can expect a hosted solution to have a minimal upfront investment and from $500 to $1,500
per user per year.
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Clearly defining your requirements and characteristics in each of these key areas will prepare
you for the next step - evaluating each individual solution's ability to deliver returns based on
the costs and benefits associated with a deployment.
Check Resumes
Once you've identified the likely vendors to deliver the best solution for you, you'll want to
check their references - and this doesn't mean just reading case studies on their Web sites.
Look to independently developed case studies and your own interviews with references to
learn about their decision process, project successes and challenges, and whether or not their
spending - and benefits - met expectations.
Find a Partner (Check Resumes, 2)
In the CRM world, few companies will deploy a solution without some help from external
consultants or systems integrators. Selecting and planning how you work with consultants is
just as important to your project's success as the technology you choose.
Justify Your Investment
Once you've identified your goals and selected a short list of vendors, you can use a
structured evaluation of costs and benefits to determine the best solution in terms of ROI and
build the business case for moving forward. On the costs side, you'll want to consider the
initial and ongoing software, hardware, consulting, internal personnel, and training costs
associated with the project.
Key Decision Factors
By and large, there's no such thing as a bad CRM solution. Most solutions deliver value when
they're chosen based on clear business needs and deployed correctly. Once you've identified
your CRM needs and your short list, there are a number of factors to consider to help you
make the right solution decision.
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CRM SUCCESS
Seeing CRM initiatives take hold and begin to pay off is often a waiting game. It’s not a
“flip-the- switch” product that automatically spits out results or something that will take
affect overnight and cause profits to skyrocket while you sleep. The puzzle must be
completed and time must play its part before true success will be seen. However, through
dedicated and smart planning, businesses should see markedly increased profits, as satisfied
customers will continually re-visit them. Gradually, as businesses get to know their
customers, their customers get to know them, and a closely aligned partnership is formed.
This one-to-one relationship is the catalyst that sparks both lifetime customer loyalty and
revenue increase.
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In the true spirit of thinking outside of the box, experts at the Gartner Group believe “the
most successful organizations will be those who, through innovation and focus on business
effectiveness rather than merely efficiency, manage to break the mold of traditional business
thinking”. Being effective is paramount. The end goal of better serving customers and
enabling a high percentage of customer retention cannot be met with out creative thinking
and effective planning and actions. The task of perfecting the relationship between business
and customer is always on going and requires special dedication and innovation as the
commerce markets continually change and fluctuate. And over time, customers change, as
does their behavior and needs, and business must be able to respond to that.
Being on the cusp of the industry and always having a hand on the pulse of the customer is
key for success. As the CRM initiative begins to take hold, key players will soon see patterns
emerge among customers, will discover what a productive strategy is and what is not. This is
the essence of a successful CRM project: being able to really know what will work for your
customers, what satisfies them, and what keeps them loyal. The ability to get an accurate gut
feeling about the marketing campaigns, new products, and the type of policies customers will
respond to is invaluable. This kind of customer knowledge only comes from really digging in
and being savvy about how you go about understanding the people that you hope will
continually call on the services and products of your business. The ROI in this case would be
compelling indeed.
Advice for Breeding CRM Success:
1. Buy the best package you can afford. Choosing a high-end system that allows for growth
is key, Monster.com's Liddell says. Monster.com has rolled out Siebel Systems' sales force
automation software to 800 users since implementing the software in November 1998.
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Where low-end packages break down is in their ability to handle complex definitions of
customers, he says. Monster.com established formal guidelines for defining customers across
divisions and applications so salespeople can access clean, consistent data.
2. Choose wisely. Figure out who you need to reach and then find the software that will help
you accomplish that. Before settling on RightNow, USF scrapped a previous CRM project a
month into the implementation after concluding the software didn't work the way the
university wanted. Too often companies choose software before they have defined the
problem, Akin says.
"I've seen it lots of times - 'Hey, this is a neat application. Let's buy it and then figure out how
we can use it here.'"
USF tapped Right Now Technologies' e-mail management software to help the IT
department, financial aid office and other administrative groups that were bogged down with
customer service inquiries from 40,000 students and staff.
3. Build and maintain a relationship with quality consultants . Consultants are important
not only in an initial deployment, but also as project parameters change - which they will,
Liddell says. Monster.com works with CRM consultant Akibia, which lets the company
quickly expand its CRM resources when necessary. Each time Monster.com acquires a new
company, Liddell's priority is to quickly get those new team members up and running with
Siebel sales tools - a process that sometimes requires extra hands.
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4. Rely on internal resources. Consultants are helpful, but it's important to maintain
ownership of a CRM project. "Nobody's more interested in our success than the team at
Monster.com," Liddell says. Plus, somebody has to run the software once the consultants are
gone.
5. Make sure everyone is onboard. It's important to have buy-in throughout the
organization, Akin says. Financial support is necessary, he says, "but more important is an
agreement to use the product universally." It's frustrating for end users if they expect to find a
single source of customer service information online and it turns out a key department is
missing from the site.
6. Align your project goals and implementation schedule. Berkson and his team at
Thomson Financial try to stick to eight- to 12-week projects, rather than rolling out
everything to everyone at once. Plus, no department is going to need every function in every
application; users would be overwhelmed, Berkson says.
Thomson Financial is in the process of upgrading its Vantive applications to PeopleSoft 8
CRM - the new Internet-based suite from PeopleSoft, which acquired Vantive in 1999.
"We tend to implement in small, manageable phases," he says. Companies should identify
their biggest pain points and greatest opportunities for return on investment, and make those
an implementation priority.
7. Start with a low-risk pilot. One project up and running quickly can validate your CRM
concepts, Berkson says. Choosing a relatively simple, straightforward project - such as
outfitting a department that doesn't require integration with other back-end systems - is
important. If you start with a complex trial, it can really drain momentum, he says.
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8. Aim for configuration, not customization. Take advantage of today's CRM tool sets,
Berkson says. Vendors have built more robust configuration flexibility into CRM
applications and recommend that users minimize customizations. So if you can break the
habit of writing custom code to accommodate unique business processes, it will be well
worth the effort when it comes time to upgrade, Berkson says.
9. Don't underestimate data requirements. The time and resources needed for data
conversion and cleanup will always be more than you think, Berkson says.
10. Provide adequate training. "If you have the time and the resources, train in advance of
rollout," Akin says. The university departments that are least enthusiastic about the
RightNow products are the ones that weren't ready for it, he says.
11. Set communications standards. In hindsight, Akin wishes his group had set content
standards among departments before going live with the project instead of trying to do it
later. At USF, e-mail inquiries are routed to as many as 30 different departments. Setting
standards for formatting responses can help maintain consistency of service.
12. Watch the details. CRM requires a team that is willing to take ownership of even the
most minute details. Monster.com has team members who maintain the software, team
members who constantly handle requests for changes and team members who police data
quality.
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CRM PRODUCTS
What Are Some CRM Products and What Can They Do For You?
CRM products are automated applications that support the accomplishment of corporate
goals related to customers, such as increased revenue and/or increased sales efficiency (i.e.,
better results with lower expenditures from sales, customer service, and marketing.) These
technologies capture customer data from across the enterprise, then analyze, consolidate
and/or distribute it for use across the multiple customer facing departments (or processes)
within the company.
CRM products can be grouped into 5 general categories:
Customer/Partner Self-Service Systems: enable your customers, suppliers, and/or partners
to use the internet to gain information that is directly relevant to them. This may include
customized product elections, order status update, on-line order entry, or self-guided query
and response. Examples of these systems include email response management systems, web
personalization systems, web-based order-entry, and web self-help.
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Sales Force Automation Systems: provide tools for your sales people to maintain their
contacts, track sales prospects, provide sales forecasts, enter and track orders, and provide
customized quotes for clients. Examples of these systems include, and on-line sales
forecasting and order-tracking.
Call Center Customer Service Systems: provide support for staff that answer client
questions or respond to requests for dispatch services. Examples of these systems include
web-based customer service, customer service call tracking, improved customer service
representative (CSR) access to client information, and automated dispatch and tracking.
Operational Billing/Order System Integration Systems: provide integration (as well as
migration) between customer-facing (front-end) applications and the production (back-end)
order-status and financial systems that contain the data that clients and partners may seek.
These systems are not only CRM systems, but rather the components of larger software suites
that may include CRM. Examples of these systems are packaged accounting and
manufacturing systems that have CRM front-ends.
Technology-Enabled Lead Generation Systems: enable targeted marketing based on client
needs and/or past business trends. This lead generation could be dynamic (emailing offers or
customizing web content) or static (providing targeted databases of clients by type). These
systems include customer data mining, automated marketing campaigns, and customer
personalization tools.
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REASONS FOR CRM FAILURE
The Top 10 Reasons CRM Projects Fail
Depending on which survey you read, you will see comments and statistics such as “over
50% of CRM (Customer Relationship Management) projects fail.” On the other hand, you
will also see published results that show double-digit percentage growth in revenue,
improved productivity, and increased customer satisfaction from new CRM projects. What
drives companies to have such different results from the same initiatives? Before we look at
reasons, let’s define the scope of CRM. CRM has been one of the most confusing terms
established in eBusiness. In many cases, it has been defined, as what the user of the term is
promoting. In the context of this article, we want to look at CRM as the following.
CRM is a strategic approach that combines the business processes, technology, employees,
and information across an enterprise to attract and retain profitable customers. CRM projects
are launched to realize the plans and achieve the objectives defined in the CRM strategic
plan. Let’s look at why many CRM projects fail and many others achieve great success. Here
is CGI’s top-ten list of reasons CRM projects fail.
1. CRM initiatives launched without a strategy.
Simply stating “We’re going to do CRM this year” is not a strategy. A CRM strategy needs to
clearly define how you will be viewed by and manage all touch points with your customers. It
should also define how you plan achieve this result.
2. The CRM strategy is not integral to the business strategy.
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CRM cannot be viewed as a project or solution separate from your overall business plan.
How you develop and grow customer relationships is the lifeblood of your company.
Customers must be a core part of your overall business strategy.
3. The CRM toolset is based on someone else’s success.
There are many CRM tool offerings in the market place. Typically, these started around a
particular process and product offering that was very effective. This offering has since been
expanded to offer broader functions through acquisition or system development. Be sure to
evaluate tools against your business requirements to get the best product for your highest
priority needs. Not everyone serves customers the same way, has the same business
processes, or has the same priorities as your business.
4. CRM is launched with no regard for enterprise or customer interfaces.
Can you afford to invest in making one part of the customer experience excellent only to
destroy it at another step in the lifecycle? Make sure every touch point you have with the
customer provides consistent, knowledgeable, and high-quality service.
5. CRM is launched without customer input.
It is so easy to get caught up in the rush to implement CRM solutions that you forget those
people on the outside of your business. Talk with your customers. Find out how they want to
be serviced. How can you better meet their needs? How can you collaborate for a true
win/win initiative? What are other suppliers doing for them that they like?
6. CRM is considered an IT project – not business initiatives leveraging technology.
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Customers interact with your company through people, processes, electronic media,
transactions and indirect relationships. They typically will not know what language your tools
are written in or what platform they run on. The capability, quality, function and reliability of
the systems are critical. But design them to support the best customer processes you can
provide. The greatest success will come from the coordinated efforts of business users and
technologists in the company.
7. CRM is launched without defined metrics and objectives.
An important part of any rollout of new processes is the expectation of improvement. If you
don’t expect performance to improve, don’t measure it, or manage it. Consequently, you
won’t see improvement. Even if you achieve it. Set expectations. Measure performance
improvement. Provide feedback. Reinforce successes. Look for ways to continue the
improving trends.
8. CRM is considered a one-time event.
Once your initiative is launched, you’re just getting started. Look at it as an evolutionary
development of your organization that will require multiple iterations to implement. You will
have some employees who resist the change. There will be bumps in the road. Solicit
feedback. Learn from the new data at your disposal. Refine your strategy. Set new goals.
Develop plans to achieve these new goals.
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9. Assume you have a customer-centric culture because you have customers.
The global economy has broken down consumer barriers, reducing geographic constraints
and revealing little difference between the products and prices of one competitor to the next.
As a result, quality and service have become driving forces behind brand preference, loyalty
and bottom line results. Be sure to look at your company as your customers do. Consider how
they want to do business with you. Develop your strategy, design processes, and make
decisions looking from the outside in. Measure, analyze and track customer service
performance. Solicit input and feedback from your customers. Benchmark with other
organizations. Drive this “customer first” culture throughout the organization. Reinforce it
with every employee.
10. No top down leadership and employee buy-in for CRM.
Every employee will be affected by fundamental changes in CRM. Appoint an executive
sponsor. Communicate vertically and horizontally through the organization. Get employees
on board. Get them excited about doing a better job for your customers and making your
company more successful. Create momentum toward a competitive customer focus. Provide
training so employees know their role and the rationale for change.
11. Altering the CRM solution to accommodate current business process and behavior.
Benefits will accrue from the adoption of new processes that leverage the information, speed,
integration, lower operating costs and improved service resulting from new CRM tools. Be
sure to take advantage of these revenue, service and productivity enhancements.
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12. CRM is regarded without urgency.
Your customer’s expectations are increasing. Maybe not from your direct competitors but
from other service providers. Will your competitors announce a quantum leap tomorrow? If
they do, what will it take to get customers back after you have lost them? How much is it
worth to pre-empt your competitors and lock in new customers?
13. Try to implement ―everything CRM‖ at one time.
What about the sense of urgency you ask? It is difficult to change the entire organization
overnight and keep it running. Organizations have personalities and need to learn new and
adaptive behaviors. Go after your highest leverage, or highest priority areas first. Show
successes to bring the rest of the organization along. Move forward in manageable steps.
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CONCLUSION
In the past, CRM was mostly about the technology, not about the customer. There is a change
in the way the organizations do business. At a technology level, CRM is increasingly about
conjoined best-of-breed applications delivered via portal technologies. At a business level, it
is beginning to invade traditional territories occupied by brand management or customer
support.
CRM is a strategic approach that combines the business processes technology employees and
information across an enterprise to attract and retain profitable customers, as a result I think
that it will be a good indicator of confidence in business in general and technology in
particular.
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Bibliography
Newspapers
o Times Of India
o Financial Express
o Economic Times
Websites
o www.salesforce.com
o www.customerservicemanager.com
o www.crmassist.com
o www.google.co.in
o www.yahoo.com
Reference Books
o MARKETING STRATEGIES &PLANS: Michael vaz, Madhu nair.
o Why CRM Doesn’t Work?