Customer Relationship Management

Introduction

 Customer Relationship Management (CRM) is a process companies use to

understand their customer groups and respond quickly-and at times,
instantly-to shifting customer desires. CRM technology allows firms to
collect and manage large amounts of customer data and then carry out
strategies based on that information. Data collected through focused CRM
initiatives help firms solve specific problems throughout their customer
relationship cycle-the chain of activities from the initial targeting of
customers to efforts to win them back for more. CRM data also provide
companies with important new insights into customers' needs and
behaviors, allowing them to tailor products to targeted customer segments.
Information gathered through CRM programs often generates solutions to
problems outside a company's marketing functions, such as supply chain
management and new product development.

 Customer relationship management is a broadly recognized, widely-

implemented strategy for managing and nurturing a company’s
interactions with customers and sales prospects. It involves using
technology to organize, automate, and synchronize business processes—
principally sales related activities, but also those for marketing,
customer service, and technical support. The overall goals are to find,
attract, and win new customers, nurture and retain those the company
already has, entice former customers back into the fold, and reduce the
costs of marketing and customer service. [1]

 Customer Relationship Management (CRM) is an essential business tool for

companies to track and organise their current and prospective customers and
partners. By integrating a wide range of up to date software applications to
support customer interactions, CRM can provide a valuable process of
improving service interactions.

Alyssa Dver “CRM is the notion that businesses should focus on the
customer and reinvent themselves to deliver personalized, service-driven
sales and support.” - Information management Magazine
Customer Relationship Management - Overview
 Inter-facers: they have frequent or extensive periods of contact with
customers and are heavily involved in delivery of services, e.g. banking
relationship managers, payments clerks or cashiers.

 Inter-jacents:  staff such as receptionists or telephone operators who have

constant involvement but little delivery. They are often, however, the first
point of contact.

 Inter-fusers: often involved in development of services but they have little

involvement in delivery. Some examples of these include: strategic
managers, marketing, research. An organisation must enable them to
develop customer awareness by giving them the opportunity to understand
customer interactions.

 Inter-players:  support staff who have little contact with customers and only
indirect involvement in service delivery

 Customer Relationship Management (CRM), also known as relationship

marketing or customer management, is an information technology industry
term for the methodologies, strategies, software, and other web-based
capabilities used to help an enterprise organize and manage customer
relationships. The goal of CRM is to aid organizations in better
understanding each customer's value to the company, while improving the
efficiency and effectiveness of communication. CRM captures, analyzes,
and distributes all relevant data from customer and prospect interactions to
everyone in the organization. This distribution of information helps an
organization better meet customer, product, and service needs.

CRM has replaced traditional marketing techniques that focused on key

marketing mix elements, such as product, price, promotion and place. By
being too functionally-based, traditional marketing techniques neglected the
customer in the after-sales process and failed to meet customers' desires.
CRM emphasizes customer retention over customer acquisition and is
recognized as one of the most viable tools used to further a company's
success in the highly competitive business world.

There are three major areas that focus on customer satisfaction: sales,
marketing, and service. The functionality of and between these three fields is
essential to successfully connecting a company's front and back offices to
facilitate effective, enterprise-wide coordination. The professional sales
 force predicts and proposes the real-time analysis of information and
distributes this information to the company and business partners. Marketing
concentrates on personalizing customer preferences and offering them
satisfying experiences. Service is associated with the companies' call centers
and coordinates interaction between Web, e-mail, and other communication
medias. These fields are developed further with the help of CRM
automation.

One of the main goals of CRM is to build up a rapport with clients and partners
and establish long lasting connections to ensure that the services
provided are up to date and that all details and contact information is
relevant for the targeted market. More than just a merely a sales tool
CRM is considered by many as a valuable process in providing
informative information to customers and partners to improve service
interactions.

Over the last couple of years customers of CRM are demanding more information
and interaction with their management facility than ever before. This has
subsequently meant that many companies are redesigning their CRM databases to
allow greater interaction and functionality for clients and their partners. In the
world of e-commerce and international trade, for companies to compete with the
maximum level of efficiency they need to be able to adapt and cater the demand of
their customer and provide a greater beneficial service than ever before.

The early days of CRM were mainly used to function for large organisations to
maintain their online information for customer service reps and staff: merely used
a a management tool to track the process of sales activities and to assess progress.

Now CRM systems have adapted to integrate from being merely storage facilities
to now decision making tools for management that provide greater benefits to
customers and staff alike by greatly improving the service interaction and thus
adding value to the company and their service.

Overall CRM is becoming more ingrained into the overall business strategy of
many companies as the developing technology allows ever greater degrees of on
time interaction and updates of services and notifications. CRM is “ a journey, not
a destination” (businessweek)
Structure of a sample CRM database.

The Benefits of Effective CRM

- Reduced operational costs

- Increase customer satisfaction and the service

encounter

- Expand the target market and attract new partners

- Increase the number of opportunities and develop additional streams of revenue

- Acquire a greater degree of information about the market and competitors

- Long term gains of profitability and sustainable income

- Provides additional room for an organisation to move forward and innovate new
ideas and concepts

- An effective CRM facility will highlight all the areas of inefficiency and what
operational procedures need to be updated and modified

- Provides a strategic element to service interactions

  Benefits

Customer relationship management tools have been shown to help companies

attain these objectives:[3]

 Streamlined sales and marketing processes

 Higher sales productivity

 Added cross-selling and up-selling opportunities

 Improved customer service, loyalty, and retention

 Increased call center efficiency

 Higher close rates

 Better customer profiling and targeting

 Reduced expenses

 Increased market share

 Higher overall profitability

 Marginal costing

A major benefit can be the development of better relations with your existing
customers, which can lead to:

 increased sales through better timing by anticipating needs based on historic

trends

 identifying needs more effectively by understanding specific customer

requirements

 cross-selling of other products by highlighting and suggesting alternatives or

enhancements

 identifying which of your customers are profitable and which are not
This can lead to better marketing of your products or services by focusing on:

 effective targeted marketing communications aimed specifically at customer

needs

 a more personal approach and the development of new or improved products

and services in order to win more business in the future

Ultimately this could lead to:

 enhanced customer satisfaction and retention, ensuring that your good

reputation in the marketplace continues to grow

 increased value from your existing customers and reduced costs associated
with supporting and servicing them, increasing your overall efficiency and
reducing total cost of sales

 improved profitability by focusing on the most profitable customers and

dealing with the unprofitable in more cost effective ways

Once your business starts to look after its existing customers effectively, efforts
can be concentrated on finding new customers and expanding your market. The
more you know about your customers, the easier it is to identify new prospects and
increase your customer base

The better a business can manage the relationships it has Function:

CRM achieve the goal of customer management, sales, and market analysis to
enterprise, family and individual.
A.Customer management refers to the overall events with the customers, including
the activity and deal of at a time and look at customer credit and information, etc.

Customer management divided into two parts:

(1) Customer-setting
(2) Customer file

Customer-setting module is applied in the customer file to set some initial value
and standard which could easy to manage the customer file.
They are:
(1) Class-setting
The only identification of the class is a one-to-one relationship.
(2) Category-setting
The category which is the multistage tree structure has a one-to-one relationship.
The same customer could belong to different categories; the category itself is
multistage, so the category is comprehensive and systematic way of statistical
investigation.
(3) Credit-setting
easy to inquiry and statistics, including information, structure, liaison, shipment
place, credit grade, customer's demand, product, account and customer
management.
(1) Customer information
The basic information of the customer includes the introduction, the contact
method and other information. The user could know the customer by and large.
(2) Structure
In this module, the user could clearly understand the subordinate relationship
between customers.
(3) Liaison
Find out the liaison and contact method of the customer in order to get in touch
with them.
(4) Shipment place
It could provide a set of related shipment including information the shipment place,
shipment mode, transportation mode and contact method.
(5) Credit grade
The user could clearly understand the entire score of every credit item so as to
know the credit grade of the customer and provide it for the decision-maker to take
better strategy.
(6) Customer's demand
The demand for product could be easy to make reasonable production plan, sales
plan.
(7) Customer's product
The user could know full well the products and directly acquainted with the basic
information. If the customer is the rival of the user, the user could find the
corresponding product number of both parties, therefore, make next competitive
strategy.
(8) Account
The user could find the type of the customer's account to acquaint with their mode
of payment and the ability to pay. In the negotiation between the two parties, the
user could make the strategy that related to the economic intercourse, such as
payment strategy, etc.
(9) Customer management
B. Sales include pricing, order, delivery, receiving fund, invoice and returning
item, here reflect the sales record between the two parties and clearly show the
sales progress in order to ask for, statistics and give information for making
strategy.

(1) Pricing
The user makes out the price list of the product according to the cost or other
factors. In the price negotiation, the staff number fixed the price with the customer
on the grounds of the sales strategy and the possible discount. The price process
between the two parties could be recorded in the price module in order to ask for
and statistics.

The price strategies include:

a)Basic price
The basic price is fixed according to the cost and other factors. It could provide a
benchmark at times of pricing.
b)Discount price
Fix the price according to the customer's sales strategy and the discount strategy.
c) Sales commission
Fix the price according to the customer's sales strategy and the sales commission
strategy.
d) Maximum discount
The user fixed the lowest item price to the salesman, and the salesman could fix on
the basis of it with the customer.

(2) Order
The order form reflects the price, receiving fund and delivery. The price includes
sales commission and invoice price, etc. The receiving fund reflects the time,
payment terms (such as check and cash, etc.) and the mode of receiving fund (such
as paid in a lump sum or in installment). Delivery includes the delivery mode,
freight, incidental expenses and related information. This information was reflected
in the order module in order to ask for and statistics.
(3) Delivery
The user chooses the mode of delivery by delivery strategy or negotiating with the
customer. The three main mode of delivery: the customer will take the delivery of
the item; the user will deliver the item; relegate the transportation to the third party.
The module record will be involved the tariff, such as CIF and FOB and whether
or not the product will export. According to the information statistics of the order
quantity, the output quantity, the freight in transit quantity and actual number, the
production and operation will be decided whether came into being.
It will reflect the order quantity, the output quantity, the arrival quantity and the
customer's confirmed quantity in this module.
(4) Receiving fund
The user could ask for the corresponding order in the system to receive fund from
the customer according to the receiving fund strategy; the user could send out the
reminder to the customer according to the payment date, and offer the receipt or
invoice to the customer according to whether they paid off the fund, finally the
financial management will came off as planned. The receiving fund process will be
recorded in this module, and the user will clearly know the receiving fund and
make better strategy according to the previous record of this module.
(5) Invoice
The information about the invoice in every sales process will be recorded in this
module. The user could ask for the past invoice information.
(6) Returning item
The information of the returning item will be recorded in this module, such as the
quantity and the cause. It could provide reference for making better delivery
strategy and other related strategywith its customers the more successful it will
become. Therefore IT systems that specifically address the problems of dealing
with customers on a day-to-day basis are growing in popularity.

Customer relationship management (CRM) is not just the application of

technology, but is a strategy to learn more about customers' needs and behaviours
in order to develop stronger relationships with them. As such, it is more of a
business philosophy than a technical solution to assist in dealing with customers
effectively and efficiently. Nevertheless, successful CRM relies on the use of
technology.

Why CRM?

In the commercial world the importance of retaining existing customers and

expanding business is paramount. The costs associated with finding new customers
mean that every existing customer could be important.

The more opportunities that a customer has to conduct business with your
company the better, and one way of achieving this is by opening up channels such
as direct sales, online sales, franchises, use of agents, etc. However, the more
channels you have, the greater the need to manage your interaction with your
customer base.
Customer relationship management (CRM) helps businesses to gain an insight into
the behaviour of their customers and modify their business operations to ensure
that customers are served in the best possible way. In essence, CRM helps a
business to recognise the value of its customers and to capitalise on improved
customer relations. The better you understand your customers, the more responsive
you can be to their needs.

CRM can be achieved by:

 finding out about your customers' purchasing habits, opinions and

preferences

 profiling individuals and groups to market more effectively and increase

sales

 changing the way you operate to improve customer service and marketing

How to implement CRM

The implementation of a customer relationship management (CRM) solution is

best treated as a six-stage process, moving from collecting information about your
customers and processing it to using that information to improve your marketing
and the customer experience.

Stage 1 - Collecting information

The priority should be to capture the information you need to identify your
customers and categorise their behaviour. Those businesses with a website and
online customer service have an advantage as customers can enter and maintain
their own details when they buy.

Stage 2 - Storing information

The most effective way to store and manage your customer information is in a
relational database - a centralised customer database that will allow you to run all
your systems from the same source, ensuring that everyone uses up-to-date
information.

Stage 3 - Accessing information

With information collected and stored centrally, the next stage is to make this
information available to staff in the most useful format.

Stage 4 - Analysing customer behaviour

Using data mining tools in spreadsheet programs, which analyse data to identify
patterns or relationships, you can begin to profile customers and develop sales
strategies.

Stage 5 - Marketing more effectively

Many businesses find that a small percentage of their customers generate a high
percentage of their profits. Using CRM to gain a better understanding of your
customers' needs, desires and self-perception, you can reward and target your most
valuable customers.

Stage 6 - Enhancing the customer experience

Just as a small group of customers are the most profitable, a small

number of complaining customers often take up a disproportionate
amount of staff time. If their problems can be identified and resolved
quickly, your staff will have mRoles & Functions

Customer Relationship Management specific roles

Static Process Roles

See Customer Relationship section, Service Management Roles x Person for

details

CRM Process Owner

Initiator of the process, accountable for defining the process strategic goals
and allocating all required process resources. See Continual Process
Improvement Management for a detailed description of these activities.

CRM Process Manager (CRM Manager)

Manager of the entire process, responsible for its effectiveness and

efficiency. Team leader of the function "CRM Team". See Continual Process
Improvement Management for a detailed description of these activities.
CRM Team

Team associated to the CRM Process.

Dynamic Process Roles

These roles are dynamically created during the CRM Process. See the process-
specific or activity-specific rules for details.

Customer Owner

The attribute in the records contains the value of the Role/Function

currently accountable for the Customer and the Customer Relation (but
NOT for the CRM Process) The customer owner is also called Account
Manager or Key Account Manager for A-class customers.

Customer Agent

The attribute in the records contains the value of the Role/Function

currently responsible for the activity or task within an activity of the
Customer Relationship Management. The CRM Agent can be changed with
the help of a functional Escalation, if permitted by the rules.

Service Specific Roles

Roles depending on the affected service are found in the Service Description. The
Service Description, including the service specific roles, is delivered from the
Service Portfolio Management.

Example: Service Description

Service Expert/Service Specialist

Service Owner

Customer Specific Roles

Information artifacts

This section describes information/data required or recorded by the process.

Typically the customer relationship process contains a set of basic definition
documents and policies:

 Sales and Distribution Strategy

 Sales & Customer Handling Policy

and customer or services related documents:

 Service Catalogue and Portfolio

 Service Level Agreements (SLA) to Service Description

 Customer contracts, agreements, terms and conditions

 Reports and analysis on customer, Customer Contact History and Report

(CCR)

 Reports and analysis on service performance

Additional documents are supporting the process:

 Market reports and other supporting documents

Sales and Distribution Strategy

Sales and Distribution Strategy defines general rules and conditions for the sales
and distribution of goods and services. Sales and Distribution Strategy is aligned
with the business strategy and can define basic rules.

More over the strategy defines general CRM process and organization.

Sales & Customer Handling Policy

Sales & Customer Handling Policy defines specific rules and conditions for the
sales of defined goods and services and the handling of the customer. Sales &
Customer Handling Policy is aligned with the Sales and Distribution Strategy and
describes:
  CRM organization responsible for the sales and service of specific goods
and services and the customer handling

 CRM process for sales and service of specific goods and services and the
customer handling

 CRM resources and roles responsible for sales and service of specific goods

 CRM organization responsible for the sales and service of specific goods

Reports and Analysis on Customer

Supplier Management is supporting the Reporting Management and is assigning

and obtaing reports for further analysis from Reporting Management.

One of the basic activities of the CRM process is to collect and analyse all kinds of
customer data generated in customer contact. Basic set of customer related data
should contain following information:

 Customer unique ID: Identification of customer

 Customer owner: person responsible for customer contact

 Customer value information: To be defied individual by each provider.

Typically used metrics are profit and/ or turnaround generated with
customer on time period (e.g. turnaround with customer per year) and
overall in total

 Customer contact details: Responsible person at customer side

 Customer service details: Service sold to customer and services offered to

customer

 Customer contract/ agreement: Details on customer contract, agreement,

terms & conditions, prices agreed

 Customer specific: Special handling information on customer like

negotiating hints etc.

 Customer Contact History:

 o Customer contact: Contact person at customer side

o Content of the contact: Details of the issues discussed

o Next steps: Next steps agreed with the customer and next steps
proposed by the internal staff

o Services discussed:

Market reports and other supporting documents

Information helping to project the behaviour and requests of the customer. This
could be:

 Market analysis

 Expert interviews

 Competition analysis

 Interviews with own staff recently changed from competition

 General economic analysis

Customer Record

Each customer contact needs to be documented in the customer contact report. This
report is used for established customer relationships as well for pojected
relationships. Following information should be regarded:

 Customer unique ID: Identification of customer

 Customer Name

 Customer Representative

 SLA & services of the Customer inkluding the historie of the Service Reports

 Customer Owner (Account Manager)

 Customer Agent
  Historie of Customer Contacts

 Customer Class

 Customer Category

 Customer Turnover

 Customer Profit

Key Concepts

Customer Category

 By definition, customer basis is split up in three supply classes by value/

commercial importance(based on ABC analysis). Typically each class is
handled in separate way, having different customer handling policies
defined:

o Class A: Customer of high value, low turnaround time, sophisticated

tender process necessary, customer needs special handling, often
dedicated CRM agent defined

o Class B: Customer of medium value, medium turnaround time,

tender process necessary

o Class C: Customer of minor value (but might have high commercial

volume), high turnaround time, easy to be supplied (e.g. standard
services)

 Customer can also regarded by their business relations history to the

provider:

o non customer: person or provider is not customer of the provider.

o prospect customer: non active customer but possible future

customer.

o active customer: customer obtaining currently service from the

provider or who obtain services recently.
 o non active customer: customer not obtaining services form the
provider since a time period.

Customer Value

Customer value to the provider is calculated by

 defining past and current turnaround with the customer and and cost of
service for the customer

 projecting future turnaround with the customer and and cost of service for
the customer

 defining possible side effects of the customer relationship (e.g. Might the
customer relationship with this customer effect other customers or
prospect customers?)

This value should be regarded as life time calculation. Some hints on that:

 Typically customer winning is the most costly activity in the customer life
cycle,

 Customer retention activities are less expensive then new customer

winning activities

 Non satisfied customer is distracting up to 12 other customer

Customer Status

Often customer are divided by their status regarding the service delivery:

 prospect customer: customer asks for service but not obtained service up
to now.

 active customer: customer currently obtaining services or recently obtained

services.

 non active customer: customer not obtain any services any more since a
period of time.
Process

Critical Success Factors

Critical Success Factors (CSF):

 Understanding of the service delivery staff for the need of customer centric
thinking

 Clear customer / internal CRM staff allocation

 Defined and communicated CRM process

 Documentation and communication of every customer contact through the

whole organization

CRM Strategy Definition

CRM Strategy Definition is dealing with definition and control of

 Basic CRM rules and

 Specific CRM rules for defined customer (groups), products, goods and
services

High Level Process Flow Chart

This chart illustrates the CRM Strategy Definition process and its activities.
Performance Indicators (KPI)

 CRM strategy performance:

o Turnaround/ profit

o New customer

per customer, per service/ good, per location, per category, …

ore time for other customers.

Increased Tracking Abilities

Customer relationship management software breaks down your sales funnel into
a visual process populated with your company's data. Potential customers can be
organized by date contacted, contract worth, or location in the funnel.

Your sales force can also be held accountable. Each account executive's
performance is presented clearly, and individual pipelines and past conversions are
itemized by type and client.

WebpageFX can configure your CRM to compare sales data between

salespeople, locations, or time periods so you always know how well your
business is performing.

Greater Process Organization

Customer relationship management software organizes all of your business
processes into a centralized location.

A usable and aesthetically pleasing dashboard visualizes all of the data from
your sales force. We can configure your web-based solution to function perfectly
on mobile devices (including BlackBerrys and the iPhone) to enable easy access
from anywhere.

Our CRM solutions can also automatically transfer website leads directly into
your CRM, saving your salespeople the hassle of entering web leads manually.

Data for Improvement

With the extra data available from a CRM, you can pinpoint weak areas in your
sales process and improve continuously.

Customer retention statistics tell you how well you are pleasing your most
profitable customers. WebpageFX CRM Customer Surveys are modeled after the
Net-Promoter Score and provide you with invaluable feedback on the performance
of your operation. With these data you can accurately forecast future business
performance.

Brands of Customer Relationship Management Software

If you prefer a web-based solution, we offer development advice for the Sugar
CRM Suite and also the salesforce.com customer relationship management
system. Each of these programs can be accessed 24/7 from anywhere with an
internet connection.

Another option is Sage ACT!: an out-of-the-box traditional software CRM. This

CRM works best for small companies in need of a lean, easy-to-install and local
solution.

Microsoft Dynamics CRM integrates with existing Microsoft products. This

means flawless communication with applications like Microsoft Office and
enterprise-scale Microsoft mainframes and databases.

A customer relationship management system:

 Simplifies your sales process

 Reduces redundancy

 Improves your bottom line