CRM: Introduction PDF

CRM: Introduction and Evolution Customer Relationship Management (CRM) is a comprehensive approach that encompasses practices, strategies, and technologies to manage and analyze customer interactions and data throughout their lifecycle. The primary objective of CRM is to enhance customer service rel...

CRM: Introduction and Evolution Customer Relationship Management (CRM) is a comprehensive approach that encompasses practices, strategies, and technologies to manage and analyze customer interactions and data throughout their lifecycle. The primary objective of CRM is to enhance customer service relationships, foster customer retention, and drive sales growth. by Mohamed Saleem Business Teacher ( Shinas Vocational College) Defining CRM A widely accepted definition of CRM comes from CRM (UK) Ltd (2002): "Customer Relationship Management is the establishment, development, maintenance, and optimization of long-term mutually valuable relationships between consumers and organizations." Gronroos defines CRM as a marketing strategy aimed at establishing, maintaining, and enhancing relationships with customers and partners, all while generating profit and ensuring the objectives of all parties involved are met. This is achieved through a mutual exchange and fulfillment of promises. Objectives of CRM 1 Customer Acquisition CRM enables companies to identify, contact, attract, and acquire new customers. It helps understand their needs and preferences, leading to targeted marketing efforts. 2 Customer Understanding CRM provides a deeper understanding of customers, their wants, and needs. This knowledge is crucial for developing products and services that precisely match their unique requirements. 3 Sales Cycle Optimization CRM streamlines and optimizes the sales cycle by providing insights into customer behavior, purchase patterns, and preferences. This allows for more efficient sales processes and improved conversion rates. 4 Customer Retention CRM enhances customer retention by improving sales, service, and support. It fosters loyalty by addressing customer concerns promptly and providing personalized experiences. Evolution of CRM 1 1960s: Mass Marketing Mass marketing involved reaching a broad audience with a single message, often through traditional media like radio, television, and newspapers. The focus was on maximizing product exposure and sales. 2 1970s: Segmentation Market segmentation emerged, dividing consumers into distinct groups based on shared characteristics like needs, purchasing behavior, or demographics. This allowed for more targeted marketing strategies. 3 1980s: Niche Marketing Niche marketing focused on specific subsets of the market with tailored products and services. This approach catered to the unique needs and preferences of smaller, specialized customer groups. 4 1990s: Relationship Marketing Relationship marketing emphasized building long-term customer relationships through personalized communication, loyalty programs, and customer-centric strategies. The goal was to foster customer loyalty and engagement. Transactional vs. Relationship Marketing Transactional Marketing Relationship Marketing Transactional marketing focuses on individual Relationship marketing prioritizes building and transactions, with little emphasis on customer value or maintaining long-term customer relationships. It satisfaction. The primary goal is to make a sale and move focuses on providing value, fostering loyalty, and on to the next customer. creating a sense of mutual benefit. Difference between Transactional Marketing and Relationship Marketing Transactional Marketing Focus on Single Sale recruitment Emphasis on product features It is short term oriented Little or no importance given to customer services Limited commitment towards the customers Focus on product quality while production Communicate to persuade Functional, mechanistic and production oriented business model Goal is customer satisfaction It Serves 4Ps of Transactional Marketing Product Price Place Promotion Relationship Marketing Focus on retention of the customer Emphasis on product benefits and systematic solutions It is long term oriented Customer service is taken as most important element Higher commitment towards the customers Focus on quality at all levels Communication to make sense and meaning More humanistic and relationship based business model Goal is customer delight It Serves 8C’s of Relationship Marketing 1. Customer Expectation 2. Customer Satisfaction 3. Customer Delight 4. Customer Cooperation 5. Customer Retention 6. Customer Touch points 7. Customer Behavior 8. Customer Collaboration Principles of CRM Customer Differentiation CRM systems should allow for customization to specific industry verticals and customer needs. Understanding each customer's unique requirements is crucial for effective CRM implementation. Offering Differentiation CRM solutions should differentiate between low-value and high-value customers, providing tailored offerings based on their individual needs and potential. Customer Retention CRM aims to improve customer satisfaction levels and scores, leading to increased customer retention. By addressing customer concerns and providing excellent service, organizations can build loyalty. Maximizing Lifetime Value CRM helps maximize customer lifetime value by identifying life stage and life event trigger points. This allows for targeted marketing efforts that cater to evolving customer needs. Advantages of CRM 1 Customer Satisfaction 2 Sales Force Automation CRM focuses on meeting customer needs and CRM automates sales processes, saving time and addressing their problems effectively, leading to resources. It provides insights into customer increased customer satisfaction and loyalty. behavior, enabling more efficient sales strategies. 3 Centralized Information 4 Improved Efficiency CRM centralizes customer information, making it CRM eliminates unnecessary processes and easily accessible for all departments. This procedures, streamlining operations and reducing improves communication and collaboration, costs. It allows for a more focused and efficient leading to better decision-making. approach to customer management. Disadvantages of CRM 1 Investment Requirements Implementing and maintaining a CRM system requires significant investment in terms of time, money, and resources. It's essential to carefully assess the costs and benefits before making a decision. 2 Resistance to Change CRM implementation can be challenging due to resistance to change from employees. It's crucial to effectively communicate the benefits of CRM and provide adequate training to ensure successful adoption. 3 Integration Challenges Integrating CRM with existing systems can be complex and time- consuming. It's important to choose a CRM solution that seamlessly integrates with existing infrastructure to avoid compatibility issues.