1 RAIS UD DIN DAR CRM-benefits and stratgies Consumer behaivour www.onlinepsychiatrist.in www.kashmirok.com GEMS B SCHOOL SRINAGAR DATE-------19-02-2012 Acknowledgement I acknowledge that the assignment CRM- its benefits and stratgies has been carried by me under my own research and from the guidence of lecturer DR. SHAHID AMIN . I am thankful to his valuabe supervision and guidence. 2 Certificate This is to certify that the assignment Customer relationship management, its benefits and stratgies has been carried out by the student RAIS UD DIN DAR under my supervision and guidence. 3 Date 19-02-2012 Dr. SHAHID AMIN LECTURER GEMS B SCHOOL CONTENTS 1. DEFINITION OF CRM.page no-----------------6 2. Benefits of crm-----page no------6 3. implementation of process of a CRM ---8 4. CRM stratgies for changing economy--------------18 4 CRM is a strategy with the help of which the company’s manage interactions with customers, clients. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing 5 and client service. With the help of crm the company’s identify the new customers and thus increase the profitability for the company. Not only the crm stratgy, helps the company’s to find the new cutomers but also it helps them to increase the loyality with them.it increases the profitability for the company by increasing the loyality with the new customers. Benefits of crm:Implementing a customer relationship management (CRM) solution might involve considerable time and expense. However, there are many potential benefits. A major benefit can be the development of better relations with your existing customers, which can lead to: 1.increased sales through better timing by anticipating needs based on historic trends.with the help of crm stratgy a company builds strong relation with its customers by providing them timily products which inturn can result in increase in sales and thus more revenues to the company. 2.identifying needs more effectively by understanding specific customer requirements. Crm when implemented not only finds out profitable custom ers but also recognizes the needs of that particular customer group. 3.cross-selling of other products by highlighting and suggesting alternatives or enhancements. There are high chances of cross selling. 4.identifying which of your customers are profitable and which are not. When crm stratgy is betterly implemented, it can help the company to find out the most profitable customers.by recognising the profitable 6 customers and then serving them profitably definitly increases profits for the company. 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. Even with years of accumulated knowledge, there's always room for improvement. Customer needs change over time, and technology can make it easier to find out more about customers and ensure that everyone in an organisation can exploit this information. 1.Implementing crm stratgy 7 Following are some important steps guiding implementation of process of a CRM system: 1. Identifying the problem areas in the customer relationship cycle that are impacting the brand loyalty and affecting the customer satisfaction and chalking down blue print of an effective communication strategy that could yield competitive advantage by redressing the customer’s apprehensions, concerns and levels of dissatisfaction. 2. Evaluating the kind of CRM data can be used to address to the identified the problem areas in the customer relationship cycle and the value that such information would bring to the business enterprise. 3. Formulating a communication plan to realign the organization towards customer centric structure rather than product centric groups. 4. Selecting the appropriate technology platform, and evaluating the cost of implementation including the software procurement, installation and training activities. 5. Assessing the (Return on Investment) and determining the benefits of the CRM implementation vis a vis the investment involved. 6. Planning and implementing the incentive schemes to ensure the users are encouraged and keep enthused to participate in the CRM initiatives. 7. Measuring and monitoring impact of the CRM initiatives. 8. Controlling and monitoring the participation by the key personnel in the CRM initiative. 9. Putting the measurement systems including the generation of the statistical inferences in place to keep track of the improvement in customer profitability with the CRM initiative. Problems while implementing crm:Customer Relationship Management is more than a simple implementation of new technological solutions for a company. It is an entire strategy to understand better and in more depth a customer’s behaviors and needs, so that the firm is able to improve its existing relationships with the customer. This means that it proves to be more of a business philosophy than a technical solution for 8 helping to deal more efficiently with customers. Still, a successful implementation of customer relationship management programs leans heavily on the utilization of technology. It is easy to see why things can go wrong in putting such a new program into place. There are a few different reasons why implementing this type of customer relationship management protocol could lead to results which are different than those anticipated. For starters, a great amount of sincere commitment is necessary in order for a CRM solution to work out properly. It might turn out that a number of individuals within the company that is implementing this customer relationship management package are simply not so committed. There are a variety of reasons for this lack of enthusiasm. Adopting an approach that is customer focused could need a great amount of corporate culture change. As a result of the sometimes painful changes, there is always the possibility that customer relationships will simply break down in the process, if everyone engaged is not fully committed to this new viewpoint of business operations from the customer’s point of view. This would then result in unhappy customers and finally a decrease in revenue. Poor communications within the organization is another reason that customer relationship management might not take effect as hoped. For it to work out right, everyone in the business has to be aware of what information is necessary. On top of this, they have to be aware of how it is used in the new system. Less than ideal leadership might lead to problems for any form of customer relationship management implementation strategy. Management has the burden of leading by example, as well as pushing to ensure that customer focus comes first on all projects. When suggested plans do not appear that they will work out for the business’ customers, then they must be discarded in favor of newer ones that will work out better. Another potential drawback in effectively implementing a customer relationship management program is the inclination of many companies to attempt to do the entire process in a single 9 attempt. While this is particularly tempting, it is a potentially dangerous strategy. CRM packages go better when they are broken down into more manageable portions. Shorter time frame goals, along with pilot programs, are the best ways to affect this. Such a pilot program will work in every relevant group and department and yet still be versatile and small enough in order to permit tweaks and changes necessary in the process. The amount of information that will be necessary to effectively make a CRM implementation happen can cause problems also. Existing computer systems and terminals may have to be expanded as a part of it. The business will have to cautiously contemplate what types of information will be gathered, as well as stored, in order to be certain that only helpful and necessary information is kept in the transition. A final possible downside when implementing the customer relationship management strategy revolves around a company’s zealous enthusiasm to get it done quickly. Many firms overlook altogether the basic requirements necessary to make the initiative a true success. It is easy for them to look at the significant information technology portion of the program and simply hand the entire program over to the IT department. This often dooms the program to disaster, since an operating tool is created within the company that offers limited usability in achieving the desired results. These CRM tools only prove to be especially effective when the front line customer service people are well versed in the methods of using the new technology to which they have gained access. Personnel attempting to train themselves might discover that their valiant efforts blow up in their faces, causing undesirable declines in customer relations. Customer relationship management (CRM) software has become an essential element of the IT arsenal of businesses of all shapes and sizes. Different businesses follow different CRM implementations. The following are a few examples of the way in which CRM has solved an important business issue. 10 Telemarketing teams CRM software can be particularly valuable for businesses that sell over the phone. A specialist business magazine has found that its current practice of keeping leads in different central databases makes it difficult for sales people to systematically call prospective subscribers. The publisher implemented a CRM solution with a single, central database connected to a telesales software package. Affiliate Marketing Examples There are many affiliate marketing examples out there on the internet. Granted most of them are safely hidden away in guides which you have to spend $67 on to get access, but anyway. This article will hopefully provide you with a few good solid affiliate marketing examples, that won't cost you a penny, and which you can start implementing straight away. Affiliate marketing is so great, because it scales so well. I like it because someo Follow Others' examples Would you like to know how somebody succeed so that you are able to copy them. OR are you concerned about what they are doing AT THE MOMENT so as to take part in their organization in the future? One of the people that taught me a great deal questions me during his live events: "Would you like me to let you see how I got where I am at present or would you like me to show you what I am doing today. The Challenge of CRM Corporations face high failure rates when implementing Customer Relationship Management (CRM) systems. Yet, CRM solutions continue to be purchased at a record rate. Why is this and how can you avoid failure? Benefits of CRM Software CRM software is a cost effective way to increase your business's profits by putting your biggest asset to work for you - your existing clients. Most people believe that CRM software is just a database of contact details of your customers. There's a lot more depth and scope 11 to this powerful business tool. Learning how to put it to use in your business can help you in more ways than you think. Now the publisher's sales force has an automated system that brings up the details of a lead whilst dialling the number at the same time. Multi-division businesses Large businesses with multiple product divisions sometimes have single clients that buy products across the company. However with separate sales and support teams for each division, client data is entered over and over by different teams and one particular sales team may have no idea as to what other purchases the client may have made. A CRM solution with a centralised database allows everyone in the company to access all available data on a particular customer which enhances cross-selling opportunities, reduces repetition and allows for a more informed sales and support team. Workflow optimisation Firms that sell products with an extensive order and delivery workflow, such as an aircraft manufacturer, frequently need access to client data at different points in the fulfilment process. If the client's data is in a number of discreet places, considerable time will be wasted trying to find details on different aspects of the order. A centralised CRM solution focused on workflow optimisation gives everyone access to the complete order details such as seating specification which reduces any errors or delays in the fulfilment process. Marketing automation 12 Perhaps the quintessential role of CRM software is to make it easier to market to existing and prospective customers. A pet supplies company that sells via mail order found that sending out catalogues to their internal Excel contact list is unprofitable and does not reach all of the firm's previous and prospective customers. The CRM solution the company installed made it easier for all staff members to enter the details and preferences of every single customer including those who have enquired but not as yet ordered. This has enabled the pet supplies company to send a vastly more targeted catalogue maillot to a broader set of contacts. Management reporting Adding up monthly sales figures and analysing which products are best sellers can be tricky when the source data consists of a mountain of invoices and order forms. A supplier of computer components has found it difficult to determine which of its products lines are best sellers and what type of customer is, in fact, the most profitable. This company decided to implement a CRM solution focused on the order process and now has the ability to extract detailed management reports u CRM stratgies:Companies can only predict what their customers will do in the future if they keep a record of past behavior and know how to translate this information into knowledge about customers. Successful customer relationships draw on this knowledge. And that is where the potential added value of customer relationship management lies. ContentsMass customization is the perfect way to bridge the gap between cost pressures and customer-specific requirements. This strategy combines customer-specific products and services with the efficiency of mass production. The customer who previously bought a standard product can now walk away with a tailored solution. Similarly, companies that traditionally produced custom-made solutions can still manufacture to order, but on a large scale, thanks to powerful new processes and product structures. Naturally, this cuts costs. Furthermore, mass customization provides the basis for successful customer relationship management (CRM) 13 through direct interaction with each customer. Used effectively, mass customization holds considerable potential: Differentiation through individuality: Products that are created specifically for a customer do not face price wars. The emphasis is shifting from price to value, and research shows that a customer who previously bought a standard product is often prepared to pay up to 100 percent more for a personalized product. Despite higher production costs, therefore, the margins for mass-customized goods are often greater than those for comparable standardized goods. New ways to cut costs: Direct interaction between a company and each of its customers makes production moren efficient and drives down costs. The “on demand” principle prevents inaccurate forecasting of final products and reduces high inventory costs. On the manufacturing side, inventory is restricted to raw materials and components, some of which are also procured to order. Elimination of Mass customization for lasting customer satisfaction and loyalty The Personal Touch finished product stock can dramatically lower storage costs. Moreover, less surplus stock means less depreciation when models become outdated. For example, in the fashion industry, a considerable E300 million (approximately U.S.$ 370 million) is wasted each year on unsold products and inaccurate planning. This figure underscores the huge cost-saving potential of mass customization. Long-lasting customer retention: A further benefit of customer- specific services is improved customer satisfaction and retention. Personal interaction between the manufacturer and individual customers is vital if the company is to gather customer-specific information and translate it into tailor-made products. This interaction forms the basis for a long-term customer relationship. Mass customization as the basis for lasting CRM It is the manufacturer’s job to use the information received during the customer interaction effectively and profitably. Customers supply mass customizers with a great deal of information about themselves, either by stipulating their own needs or by enabling the provider to infer their requirements from the configuration process. Not only do providers ascertain their customers’ preferences, they use this knowledge to create additional benefits for the customers. U.S. 14 consultants Don Peppers and Martha Rogers talk of“learningrelationships” that grow and become more intensive and intelligent with time. Adidas-Salomon demonstrates this perfectly with its mass customization program “mi adidas” (see graphic): A customer sing a variety of crwants to buy personalized running shoes for around U.S.$ 150. The more the customer tells the vendor about his/her likes and dislikes during the integration process, the better chance there is of a product being created that meets his/her exact needs on the first try. After delivery of the customized product, feedback from the shoe- wearer consolidates adidas-Salomon’s knowledge of the customer. The manufacturer can draw on detailed information about the customer for the next sale, ensuring that the service provided becomes quicker, simpler, and more focused. The state of information is increased and finely tuned with each additional sale. This data is also used to propose subsequent purchases automatically once the life of the training shoes is over (for many mi adidas customers who train intensively, this can be every couple of months). The potential of learning relationships When adidas-Salomon enters a learning relationship with its customers, it increases the revenues from each customer because, in addition to the actual product benefits, it simplifies the purchasing decision, so the customer keeps coming back. Why would a customer switch to a competitor – even one that can deliver a comparable customized product – if adidas-Salomon already has all the information necessary to supply the product? A new supplier would need to repeat the initial process of gathering data from the customer. Moreover, the customer has now learned how his/her integration into the process successfully results in the creation of a product. Such learning relationships boost loyalty. In many CRM initiatives, only the communication with the customer is personalized – and often just through advertising materials. Such initiatives do not reach far enough and are usually unsuccessful. Customers do not want personalized communication with a company – they want products that cater to their individual needs. Learning relationships are also the basis for expanding knowledge about customers. Companies that compare information about individual customers are in a better position to 15 address their sales market in a targeted and efficient way. By collecting and aggregating information from a segment of customers, adidas-Salomon gains valuable market research 15 Made to Order When the subject of mass customization is raised, the successful model of computer supplier Dell is often named as one of the most impressive examples. But many other companies have also sustained lasting relationships with their customers through mass customization. More examples are described at www.mass-customization.de, but here are a few: Dolzer, a leading German manufacturer of women’s and men’s clothing, is a fine example of how a company interacts well with its customers both in the\ traditional store and online. Dolzer enables its customers to create their own garments by choosing from a variety of fabrics and cuts. Trained consultants provide advice in the company’s six stores, the online shop offers made-tomeasure shirts and blouses at a fixed price of € 50 (approximately U.S.$ 62). The customer is led through the process, selecting the fabric and cuff style and finally entering detailed measurements (www.dolzershop.de). A personal cosmetics series for every woman is the vision of U.S. Internet supplier reflect.com – a subsidiary of Procter & Gamble. Customers configure their own makeup to match the precise requirements of their skin type and complexion. The appealing innovative nature, coupled with a high degree of integration and a strong customer engagement mechanism, has made the company the most successful supplier of cosmetic products over the Internet in the United States. Now reflect.com has its sights set on store retailing with a multi-channel strategy .knowledge that is similar to panel data but without the usual effects of panel surveys. As a result, new products can be planned more efficiently and market research is more effective because of unfiltered access to data on market trends and customers’ needs. This is of special benefit to companies that unite large-scale make-to-stock production with tailored services. 16 Two requirements for sustained CRM: There are two prerequisites for a successful CRM program. The first is an offering based entirely on the wishes and needs of the customer – not simply on standard processes “cosmetically personalized” through irritating promotional letters. A sensible customer-company liaison begins with personal contact, continues with the creation of sales activities according to customer- specific specifications, and finishes with a learning relationship, whereby the provider is the student, not the teacher. Second, high-quality processes must underpin these customer-specific services. Using new information and communication techniques effectively is just as important as having well-trained, motivated staff to interact with customers. The aim is to create an atmosphere conducive to customer integration and ensure that every communication between customer and company is a positive experience – leaving the customer convinced that to remain loyal is more convenient than to turn to a competitor. CRM stratgies for changing economy: How do companies achieve these goals in an uncertain market? The pending economic recovery will have different effects on companies that have tailored their CRM programs to the new economic realities. Winners will be those that capitalized on the downturn and prepared for increasing the value of customer relationships. Companies that want to lock in customer loyalty and maximize profitability need to employ four CRM tactics: 1) build a customer growth strategy upon a CRM foundation of strategic intent and cost management; 2) avoid the CRM whipsaw effect; 3) don't buy into the technology silver bullet; and 4) measure satisfaction with CRM. These tactics will ensure that CRM programs can successfully adapt to the pending changes in the economy. 17 Build a Customer Growth Strategy Businesses must build top-line growth strategies upon the foundation of their CRM programs by ensuring that strategic intent and cost management measures are institutionalized. Many companies have not determined strategic intent or have not focused on developing clear metrics to measure performance. Yet many have done some cost-cutting within customer-facing functions and lowered their cost-to-serve just to reduce the overall cost of sales. These cost-structure changes should be modified to invest in these fields of CRM so that growth strategies gain some early wins, no matter what state the economy is in. As the economy turns into recovery, the winners are likely to be those who have not only stabilized their customer service and sales costs, but those who are improving the effectiveness of customer retention and loyalty programs. Improved customer segmentation, customer satisfaction, and service strategies should be tailored in downturns and expanded in upswings, but need to remain long-term goals of any successful CRM program. Avoid the Whipsaw Effect Senior management commitment is critical to the success of any major corporate initiative. CRM is certainly no exception. In fact according to the CRM magazine/A.T. Kearney survey results, IT decision-makers ranked executive sponsorship as the most important factor for maximizing the return on their CRM investments. If CRM initiatives are not in the CEO's agenda, then investments in these initiatives have a much lower probability of success. Additionally, because CRM is a fundamental shift in the way a company does business with its customers, rather than just a one-time e-business initiative, it requires continuous leadership support over multiple years. This type of long-term senior management support can only be achieved and maintained if a long-term strategic plan is developed. The time frame also requires the strategic plan to have built-in contingencies for the ups and downs of the business cycle. Without this type of flexible strategy, companies get caught in a CRM whipsaw: overinvesting in one year and then cutting to the bone in the 18 next. The result is unrealized investments, squandered opportunities, and a loss of employment for the CRM champion. The whipsaw may affect users as well. Employees whose new customer-centric behaviors enable CRM success can get caught in the whipsaw if communications about customer strategy and CRM processes are not clear or consistent throughout changes in the business cycle. Don't Buy in to the Technology Magic Bullet The CRM vendor landscape is changing rapidly. Placing all bets on a single vendor or technology can prove disastrous. The unstable economy has caused a vendor shakeout. It has reduced the number of CRM vendors, but also has enabled the strongest companies to survive with the best integrated offerings. Strong vendors, after acquiring or merging with smaller niche vendors, still have to refine the resulting integrated offerings. Even so, research indicates software functionality is not the prime factor in selecting a CRM vendor. Financial viability and ROI remain the most important factors in selecting a vendor, and reflect the fact that the best-of-breed approach in recent years has left a number of companies holding the bag of unsupported applications. The focus on vertical expertise has also been increasing. Companies stung by the challenges and high costs of customizing standard applications are demanding that the major vendors of the CRM world ensure that vertical customizations are prebuilt into the application they install. Customers are focusing on implementing the best vertical application available. This shift has also been pressuring vendors that have not caught up with the verticalization wave or have poorly packaged and standardized their industry experience within applications. Measure Satisfaction With CRM Measuring CRM success has often been elusive, but it is possible to measure satisfaction with CRM. Companies have often measured success either by ROI or by changes in customer satisfaction to justify CRM benefits. Although capturing ROI and preventing CRM budget expansion is important, the CRM magazine/A.T. Kearney research indicates that 60 percent of companies claim their CRM initiatives met or 19 exceeded expectations. Of the rest, 25 percent did not set expectations. So for the moment, there appears to be more satisfaction with CRM projects than not. However, ROI generally measures the internal return of a technology/ process or organization improvement project. In the survey, external measures like customer satisfaction, retention, and profitability--often the best indicators of how well customers view their overall relationship with companies-- were selected by only 37 percent, 33 percent, and 22 percent respectively. This leads to two possible conclusions: 1) given the challenges of deploying CRM initiatives and effecting customer change, companies may be assigning lower levels of expected success without engaging their customers; or 2) companies are embarking on expensive CRM initiatives without understanding the drivers of their customer satisfaction, retention, and resulting profitability. In either scenario, companies are shortchanging themselves by reducing the future value of their customer relationships and placing the long-term success of those relationships at risk. From an internal perspective, ROI was the dominant metric used to measure returns, though notably 21 percent of respondents didn't know how their companies measured return. As for time-to-return after project completion, most of those surveyed were split between the six- to 12-month time frame and more than one year. This is on average longer than most e-business initiatives, and reflects the fact that CRM often involves multiple channels and functions undergoing organizational, process, and technology changes. Given the complexity and level of investment in CRM, companies need to ensure they understand the drivers of value in their customer relationships before they embark on major initiatives, as well as build robust business cases for internal measures of CRM success. Plan for Growth Up to 44 percent of companies do not have a strategic plan in place, although many respondents are planning or implementing CRM initiatives. Those that do not have one in place are likely to be out of position to reap benefits from CRM. As benefits from CRM take longer on average than benefits 20 from e-business, there will be a lag between the companies that have a plan that can execute and those that will need to start a strategic plan. Developing a CRM strategic plan takes one to two quarters, which is about the duration of catch-up that companies without a current plan will face. While cost reductions will provide a sound CRM foundation, the real benefits come from top-line growth--and these gains should be pursued within a CRM program no matter which way the economic pendulum is swinging. Those companies that don't have a sound CRM strategy should use the current economic downturn to begin developing their strategy to include both short- and long-term scenarios with ranges of ROI for different CRM initiatives. Then, depending on how and where the economy improves, their focus will be on executing against the best scenario. Those with plans should prepare their customer-facing units for the economic recovery ahead and ensure that the organization is aligned with incentives for growth. Those companies with initiatives on hold should have implementation plans drafted so they may ramp up quickly when CRM budgets are restored. It is this advanced planning--along with building a customer growth strategy, avoiding the CRM whipsaw effect, avoiding the technology silver bullet, and measuring satisfaction with CRM-- that will increase customer loyalty and retention and maximize customer profitability. growth strategy, avoiding the CRM whipsaw effect, avoiding the technology silver bullet, and measuring satisfaction with CRM-- that will increase customer loyalty and retention and maximize customer profitability.