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Chapter: Business Science - Customer Relationship Management - CRM Structures

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Customer Relationship Management (CRM) Structures

To ensure that your company can provide the best customer service experience possible the use of customer relationship management (CRM) software should be considered.

CRM STRUCTURES

 

ELEMENTS OF CRM:

 

When your company communicates with your customers the process can involve many different people within both organizations using a variety of different methods. The main tool that is used is an order that is communicated by your customer to your sales department. However this is only one of many communications that should be managed. To ensure that your company can provide the best customer service experience possible the use of customer relationship management (CRM) software should be considered.

 

 

 

      CUSTOMER KNOWLEDGE

 

The customer service function in your company represents the front office functions that interact with your customers. These are the business processes that allow your company to sell products and services to your customers, communicate with your customers with regards marketing and dealing with the after sales service requirements of your customers. Each interaction with the customer is recorded and stored within the CRM software where it can be retrieved by other employees if needed.

 

      RELATIONSHIP STRATEGY

 

      COMMUNICATION

 

      INDIVIDUAL VALUE PROPOSITION

 

      SALES FORCE AUTOMATION

 

      The company‘s sales department is consta existing and new customers. The sales force automation functionality of CRM software

 

allows the sales teams to record each contact with customers, the details of the contact and if follow up is required. This can provide a sales force with greater efficiencies as there is little chance for duplication of effort. The ability for employees outside of the sales team to have access to this data ensures that they have the most recent contact information with customers. This is important when customers contact employees outside

 

of the sales team so that customers are given the best level of customer service.

 

      CAMPAIGN MANAGEMENT

 

      The sales team approach prospective customers in the hope of winning new business. The approach taken by the sales team is often focused in a campaign, where a group of specific customers are targeted based on a set of criteria. These customers will receive targeted marketing materials and often special pricing or terms are offered as an inducement. CRM software is used to record the campaign details, customer responses and analysis performed as part of the campaign.

 


  CRM PROCESS

 

      The formation process of CRM refers to the decisions regarding initiation of relational activities for a firm with respect to a specific group of customers or to an individual customer with whom the company wishes to engage in a cooperative or collaborative relationship.

 

      It is important that a company be able to identify and differentiate individual customers. In the formation process, there are three important decision areas: defining the purpose(or objectives) of engaging in CRM; selecting parties (or customer partners) for appropriate CRM programs; and developing programs (or relational activity schemes) for relationship engagement with the customer.

 

CRM PROCESS


 

      THREE STEPS OF CRM PROCESS 1.Acquisition :

 

It comprises enquiry, interaction, exchange, co-ordination and adaptation. 2.Customer Interaction Management

 

3.Customer Retention

 

      Customer Acquisition

 

      Customer acquisition is a broad term that is used to identify the process and procedures used to locate, qualify, and ultimately secure the business of new customers.

 

      Customer retention effort is to identify and quality potential customers.

 

      Inputs for Acquisition

 

      The purpose of customer acquisition an organization is likely to focus its attention on the following

 

1.     The suspects

 

2.     The enquiries

 

 

3.     The lapsed customers

 

4.     The former customers

 

5.     The competitors customers

 

6.     The   competitors   lapsed   customer‘s

 

7.     The   competitor‘senquiries

 

8.     The competitors former customers

 

9.     The referrals

 

10.                        The existing customers

 



STRATEGIES FOR CUSTOMER ACQUISITION

 

1.  FOCUSED APPROACH:

 

a)     Knower

 

b)    Preferer

 

c)     Indifferent

 

d)    Rejecters

 

2.     PROVIDING A WIN-WIN PLATFORM

 

3.     INTITATE FORUM FOR COMMUNICATION

 

4.  ATTEMPT TO MINIMIZE   ―FUD‖   (Fear,Uncertainity,Dou

 

5.     PROJECTION OF BENEFITS AND NOT PRODUCTS

 

6.     CONTEXTUAL APPLICATION

 

7.     FOCUS ON DECISION PROCESS

 



CUSTOMER RETENTION

 

Customer retention is the activity that a selling organization undertakes in order to reduce customer defections.

 

Successful customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship.

 

A company‘s ability to attract andproductretainor ne services, but strongly related to the way it services its existing customers and the reputation it creates within and across the marketplace.

Customer Retention Programs : Figure: 3.2



 

   STRATEGIES FOR CUSTOMER RETENTIONS

 

1.     PEOPLE

 

2.     PRODUCT

 

3.     PROCESS

 

4.     ORGANISATION

 

5.     SETTING SATISFACTORY SERVICE STANDARDS

 

6.     CONCENTRATION ON COMPETITORS

 

7.     CUSTOMER ANALYSIS

 

8.     COST ANALYSIS

 

9.     CONCENTRATION ON  THE PAYING ABILITY OF CUSTOMERS

 

10.            KNOWLEDGE ON PURCHASE BEHAVIOUR PATTERN

 

 

11.            DIFFERENCIATION IN PRICES AND QUALITY STANDARDS

 

12.            FOCUS ON REDUCING DISSATISFACTION

 

13.            ATTENTION ON CHANGING REQUIREMENT OF CUSTOMERS

 

14.            CONCENTRATION ON PERFORMANCE

 

15.            TRAINING TO SUPPLY CHAIN EMPLOYEES

 

16.            EMPOWERMENT TO SERVICE PROVIDERS

 

17.            INCENTIVIZING SERVICE PROVIDERS

 

18.            AUGMENTING INTANGIBLE BENEFITS

 

19.            VISIT TO THE POINT OF USAGE OF THE PRODUCT

 

20.            DEVELOP PARTNERSHIP WITH CUSTOMERS

 

21.            ORGANIZING CUSTOMER CLUBS

 

22.            RELATIONSHIP BASED PRICING SCHEMES

 

23.            EFFECTIVE CUSTOMER COMMUNICATION SYSTEM

 

24.            CUSTOMER COMPLIANT MONITORING CELL

 

25.            DEVELOPING CUSTOMER SATISFACTION INDEX

 

26.            FOCUS ON PREVENTIVE ACTIONS

 

27.            CONCENTRATION ON CUSTOMER SATISFACTION RESEARCH

 

28.            FOCUS ON FOCUS GROUP

 

29.            BUILDING SWITCHING BARRIERS

 

 

 


CUSTOMER DEFECTION

 

Customer defection is the rate at which customers defect or stop the usage of products of a company. business with high defection rate, would be losing their existing customers.

 

In order to overcome this they use another term of customer retention, in simple words its to retain or prevent the existing customers to defect the product.

 

 

1    TYPES OF DEFECTION

 

·        PRICE DEFECTORS

 

·        PRODUCT DEFECTORS

 

·        SERVICE DEFECTORS

 

·        MARKET DEFECTORS

 

·        TECHNOLOGICAL DEFECTORS

 

·        ORGANISATIONAL DEFECTORS

 

2    STRATEGIES FOR PREVENTION OF DEFECTION

Every customer that you keep represents at least three that you don’t have to attract. Numerous research studies indicate that the cost of acquiring a new customer usually runs from  two to four times the annual cost of keeping an existing customer. Obviously, an effective  customer retention strategy translates into profits.

 

It has been estimated that most companies spend about 98 percent of their time reacting to  problems and less than 2 percent preventing them. The first, most important, way to prevent  customer defections is to identify and define each problem from the customer‘s vantage point.  This blog suggests several ways to retain customers once you understand the problems and their  ramifications.

 

Superior service and database management provide your best defense against customer

 

defections. Service provides the opportunity to solve customer problems and build partnerships; the database serves as a vehicle to personalize customer communication and enhance your relationships. The Key Points Are

 

4           ANALYZE CUSTOMER DEFECTIONS AND MONITOR DECLINING ACCOUNTS

 

5           ADDRESS KEY CHURN DRIVERS

 

6           IMPLEMENT EFFECTIVE COMPLAINT-HANDLING AND SERVICE RECOVERY PROCEDURES

 

7           INCREASE SWITCHING COSTS.

 

 

 

 MODELS OF CRM

 

      IDIC MODEL: I- IDENTIFY

 

D –DIFFENCIATE I –INTERACT

 

C - CUSTOMIZE

 

 

 

      Qci MODEL : Figure:3.3

 


• CRM Value chain Figure:3.4


• Payne‘s-processFivemodel: Figure:3.5


• Gartner Competency model : Figure:3.6

 


 


CRM IMPLEMENTATION ROADMAP


A CRM Roadmap is a strategic plan that identifies how a company can meet and exceed its  customers‘ needs. This includes, but is not limited to, assessing how the sales, marketing,

and service entities work together to:

1) Gain insight from their customers

2) Produce valuable offerings/products (for example, personalized product); and

3) Provide the ultimate customer experience.

Developing a CRM Roadmap involves aligning an organization‘s business strategy with its  prioritized CRM capabilities. For example, if a company‘s business strategy is to develop  products faster to gain unique market positioning, the capabilities that the company needs to master should be aligned with that strategy, and might include:

• Leveraging customer information from the service process (for example, integrating customer feedback during service calls with the marketing department).

• Effectively managing product mix (measure success by campaign).

• Effectively managing sales channel strategy (eliminate conflict between distribution channels).

So how do companies know which CRM capabilities they have, and which they‘ll need to realize their strategic goal? Below are the eight primary steps (which have been used across industries,  including financial services, electronics and high-tech, consumer products, manufacturing, etc.) 

      SCENARIO ANALYSIS

 

      PURPOSE AND OBJECTIVES

 

      BUSINESS PLANNING

 

      PROCESS DESIGN a.Technology and vendor selection B.Solution development C.Implementation

 

D. Measurement

to follow when developing a CRM Roadmap.


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