In this article we will discuss about Customer Relationship Marketing (CRM)! Learn about:- 1. Introduction to Relationship Marketing 2. Definitions of CRM 3. History 4. Concept 5. Types 6. Objectives & Context 7. Purposes of Adopting CRM Processes 8. Features 9. Functions 10. Importance 11. Need 12. Management of Relationship 13. Strategies 14. Notes 15. Benefits 16. Disadvantages.

What is Customer Relationship Management ?

  1. Introduction to Customer Relationship Management
  2. Definitions of CRM
  3. History of CRM
  4. Concept of CRM
  5. Types of CRM
  6. Objectives & Context of CRM
  7. Purposes of Adopting CRM Processes
  8. Features of CRM
  9. Functions of CRM
  10. Importance of Customer Relationship Management 
  11. Need for Customer Relationship Management
  12. Management of Relationship
  13. Relationship Marketing Strategies
  14. Notes on CRM
  15. Benefits of CRM 
  16. Disadvantages of CRM

Customer Relationship Management (CRM): Introduction, Objectives, Notes, Benefits and Examples!

1. Introduction to Customer Relationship Management:

CRM is about acquiring, developing and retaining satisfied loyal customer, achieving profitable growth, and creating economic value in a company’s brand. CRM is not a new concept but an age-old practice, which is on the rise because of the benefit it offers, especially in the present market scenario.


CRM today is a discipline as well as a set of discrete software and technologies, which focuses on automating and improving the business processes associated with managing customer relationships in the areas of sales, marketing, customer service and support.

CRM helps companies to understand, establish and nurture long-term relationships with clients, as well as help in retaining current customers. The most important step that an organization has to take in the direction of CRM is to create an inter-disciplinary team to review how the organization interacts with each customer and determine how to improve and extent the relationship.

At present, more and more companies are adopting various CRM practices, as CRM promises numerous benefits-including shorter sales cycles, integrated customer feedback, improved communication, improved response, improved customer knowledge, improved efficacy, better customer tracking, enhanced customer satisfaction and increased loyalty.

The emergence of CRM as a business strategy has radically transformed the way organizations operates. There has been a shift in business focus from traditional to relationship marketing where the customer is at the centre of all business activity and organizations are now desperately trying to restructure their processes around the needs of their strategically significant customers.


The critical driver of such a seismic shift towards customer orientation is the realization that customers are a business asset that when managed effectively can derive continuous and sustainable economic value for an organization over their lifetime.

The dynamics of the business ecosystem have changed the way in which companies do business both in relationship management and the streamlining of their operations. Relationship marketing is emerging as the core marketing activity for businesses operating in fiercely competitive environments.

On an average, businesses spend six times more to acquire new customer than to keep them. Therefore,-many firms are now paying more attention to their relationships with existing customers to retain them and increase their share of customers’ purchases.

The practice of relationship marketing also has the potential to improve marketing productively through improved marketing efficiencies and effectiveness.


Retaining and developing customers has long been a critical success factor for businesses. In that sense, Customer Relationship Management (CRM) is not new, previously falling under the guise of customer satisfaction.

Worldwide, service organizations have been pioneers in developing customer retention strategies. Banks have relationship manager for selected customers, airlines have frequent flyers programmes to reward loyal customers, credit card companies offer redeemable bonus points for increased card usage, telecom service operators provide customized services to their heavy users, and hotels have personalized services for their regular guests.

It is, however, with the rapid rise of new entrants into the marketplace and increased competition that companies in other sectors have recognized the business potential within a captured base.

Due to sluggish growth rates, intensifying competition and technological developments businesses induced to reduce costs and improve their effectiveness. Business process re- engineering automation and downsizing reduced the manpower costs.


Financial restricting and efficient fund management reduced the financial costs. Production and operation costs have been reduced through Total Quality Management (TQM), Just-in-Time (JIT) inventory, Flexible Manufacturing Systems (FMS) and efficient Supply-Chain Management (SCM).

However, reduction alone is no longer enough or is necessarily an effective strategy. In facing the competitive threats, such as new entrants, pricing pressures, technology along with the related costs and also including the time lags in procuring, maintaining and strengthening one’s market, more and more organizations are realizing that the traditional marketing model is no longer effective.

With a flood of new entrants offering quality products and services at lower prices, many sectors have been returned into commodity markets. In a marketplace where loyalty has plummeted and the cost of acquiring new customers is prohibitive, companies have turned to their current customer in an attempt not only to retain them but to exploit the potential within.

This has enabled them not only to respond to the threats in their marketplace but also positioned them strategically to take advantage of the opportunities available.


2. Definitions of CRM:

Customer Relationship Management or popularly identified as CRM can be defined as an art and science of collecting information on present and prospective needs of product of customers so as to market them using all such kind of efforts and technology in collection of date and information relating to customers.

CRM is a process of collecting information about the customers and aligning and remodeling the organisations strategy to meet the customer’s demand, the focus of CRM is on people rather than products and services. Business and processes are built with the customer in mind and the emphasis is on what can be done to make people who want to do business with you over and over again.

Relationship Marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes Customer retention and Satisfaction rather than a dominant focus on Sales transactions. According to Liam Alvey Relationship marketing can be applied when there are Competitive products alternatives for customers to choose from and when there is an ongoing and periodic desire for the product or service.


CRM is a tool for servicing the customer. Firms of late are making use of technology to serve the customers by using and application of latest development in information technology.

Galbreath defines “CRM has activities of an enterprise performed to identify, to select, acquire, develop and retain loyal and profitable customers.” CRM is not only concerned with existing customers it also aims at developing new customer base by designing marketing and its product to suit their need.

CRM is an approach that integrates people, processes and technology to maximise the relations of an organisation with its customers. Firms make use of the development in communication and technology to collect information regarding product and its marketing to meet expectations of people. Firms keep on developing customer’s data base to update their need and designing marketing strategy to satisfy such needs.

3. History of CRM:


CRM is based on the principles of relationship marketing, so a brief review of the development of marketing is helpful to understanding the evolution of CRM. As industries have matured, there have been changes in market demand and competitive intensity that have led to a shift from transaction marketing to relationship marketing.

Credit Suisse Group is one of the world’s leading financial services companies. It operates in fiercely competitive banking and insurance markets where customer acquisition is very expensive and the retention of profitable customers is critical.

In the late 1990s Credit Suisse launched a Loyalty Based Management programme to retain its most profitable customers. Using sophisticated data mining techniques, the company analyzed its data warehouse of 2.5 million customers and identified the most profitable customers and their common characteristics.

Targeted marketing programmes were then established for each market segment. The data analysis also revealed potential leads which could be followed up by sales consultants, providing a cost-effective basis for developing cross-selling and customer acquisition strategies.

In the 1950s, frameworks such as ‘the marketing mix’ were developed to exploit market demand. The shorthand of the ‘4Ps’ of product, price, promotion and place were used to describe the levers that, if pulled appropriately, would lead to increased demand for the company’s offer.

The objective of this ‘transactional’ approach to marketing was to develop strategies that would optimize expenditure on the marketing mix in order to maximize sales.


During the latter years of the twentieth century some of these basic tenets of marketing were increasingly being questioned. The marketplace was vastly different from that of the 1950s.

Numerous markets had matured in the sense that growth was low or nonexistent, resulting in increased pressure on corporate profitability. In many instances consumers and customers were more sophisticated and less responsive to the traditional marketing pressures, particularly advertising.

Greater customer choice and convenience existed as a result of the globalization of markets and new sources of competition and the emergence of new media and channels. Innovative business thinking and action was required to meet the challenges of this new competitive environment.

In the early 1990s Philip Kotler, a professor at Northwestern University, proposed a new view of organizational performance and success based on relationships, whereby the traditional marketing approach – based on the marketing mix – is not replaced, but is instead ‘repositioned’ as the toolbox for understanding and responding to all the significant players in a company’s environment.

Kotler’s comments underscore the need for an integrated approach for understanding the different stakeholder relationships. In many large industrial organizations, marketing is still viewed as a set of related but compartmentalized activities that are separate from the rest of the company.

Relationship marketing seeks to change this perspective by managing the competing interests of customers, staff, shareholders and other stakeholders. It redefines the concept of ‘a market’ as one in which the competing interests are made visible and therefore more likely to be managed effectively.


The development of this broader wave of marketing thinking by marketing academics and practitioners has influenced the perceived role of marketing in business. In effect, marketing is given lead (but not sole) responsibility for strengthening the firm’s market performance.

Relationship marketing emphasizes two important issues. First, you can only optimize relationships with customers if you understand and manage relationships with other relevant stakeholders. Most businesses appreciate the critical role their employees play in delivering superior customer value, but other stakeholders may also play an important part.

Second, the tools and techniques used in marketing to customers, such as marketing planning and market segmentation, can also be used equally as effectively in managing non-customer relationships.

Customer Relationship Management (CRM) is an information industry term for methodologies, software and usually Internet capabilities that help an enterprise manage customer relationships in an organized way.

For example – an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased and so forth.

According to Paul Greenberg – “CRM is a philosophy and a business strategy supported by a system and a technology designed to improve human interactions in a business environment”.


4. Concept of CRM:

The concept CRM is the methodology which enables the organization to understand the customers’ needs and behaviour better. It introduces reliable processes and procedures for interacting with customers and develops stronger relationships with them.

The process helps organization in assimilating information about customers, sales, marketing effectiveness, responsiveness and market trends. Then this information is used to give insight into behaviour of customers and value of retaining those customers.

The whole process is designed to reduce cost and increase profitability by holding on to the customer loyalty.

A simple installation and integration of the software package does not ensure success. It has to be absorbed into the system. Employees have to be convinced about its positive attributes and then they have to be trained.

The existing business processes have to be modified. The company has to decide what kind of information is to be collected about the customers, what is to be done with the information and priorities this accumulated information.


The company must drill into this database of its customers and ascertain their buying patterns, product preferences, the potential for add-on sales etc.

A good strategy will be to integrate every area of touch point with customers like marketing, sales, customer service, and field support. This is achieved with the integration of the people, process, and technology in the business.

According to one industry view, CRM consists of:

(i) Helping an enterprise to enable its marketing departments to identify and target their best customers, manage marketing campaigns and generate quality leads for the sales team.

(ii) Assisting the organization to improve telesales, account and sales management by optimizing information shared by multiple employees and streamlining existing processes (for example- taking orders using mobile devices).

(iii) Allowing the formation of individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits; identifying the most profitable customers and providing them the highest level of service.


(iv) Providing employees with the information and processes necessary to know their customers understand and identify customer needs and effectively build relationships between the company, its customer base and distribution partners.

5. Types of CRM:

There are several variations in CRM. Among the most common is Sales force, Automation, Customer Service, Marketing Automation, Analytics Automation etc.

Each of these mentioned above will be discussed below:

1. Sales Force Automation (SFA):

In sales force automations software is used by the company to improve the efficiency of the sales process. This results in sales representatives having to spend less time on different parts of the sales process, which allow them to spend more of their available time pursuing clients.

It allows the company to track or record each stage of the sales process and pay attention to each client served by the company. Additionally, SFA software applications may also provide information on territories, opportunities, work flow automation, sales forecasts and knowledge of products.

2. Customer Service:

In customer services technology may be used by companies to improve the quality of service they can offer customers, while at the same time increasing the efficiency and minimizing the cost of that service. Comprehensive call center solutions are commonly applied here, such as computer telephone integration (CTI) and intelligent call routing (ICR).

3. Marketing Automation:

In marketing system the automation assist the company in locating and reaching its best customers, as well as in finding leads the sales team can pursue. A valuable feature in marketing is the ability to not only track but also measure diverse campaigns, including domains such as social media, direct mail, email and searching. Data monitored by marketing include deals, responses, revenue and leads.

4. Analytics Automation:

System involving analytics are typically integrated with applications related to service, sales and marketing. The purpose of sales analysis is to allow companies to develop a more comprehensive understanding of why clients do what they do and hold the preferences they do.

Web analytics for example, have increased in complexity from their initial functions as means to track mouse clicks to their current implementations as methods of predicting likely purchases and identifying difficulties of customers facing in making purchases.

5. Small Business:

Small business solutions that assist both individuals and organizations in monitoring and documenting interactions such as jobs, emails, faxes, documents and scheduling. Tools for small businesses generally focus on account management. Small businesses are increasing turning toward online solutions, particularly for workers who travel and telecommunicate, to solve their business needs.

6. Integrated and Collaborative Practices:

Integrated and Collaborative practices refers to interaction and collaboration between department inside companies and enterprises, the goal here is to increase levels of cooperation among different departments such as marketing, sales and service. Collaborative systems involve the use of technology to bridge distances between departments.

7. Non Profit Organisations:

Non Profit Organisations are used to track constituents, as well as the actions they take related to the org itself. Such systems typically include capabilities for tracking features such as fund raising membership levels, volunteering demographics and communications with target individuals.

6. Objectives & Context of CRM:

CRM, the technology, along with human resources of the company, enables the company to analyze the behaviour of customers and their value.

The main areas of focus are as the name suggests customer, relationship and the management of relationship and the main objectives to implement CRM in the business strategy are:

(i) To simplify marketing and sales process.

(ii) To make call centre’s more efficient.

(iii) To provide better customer service.

(iv) To discover new customers and increase customer revenue.

(v) To cross sell products more effectively.

Context of CRM:

The context of CRM can be summarized as follows:

(i) Increased Sales Revenue:

Increased sales result from spending more time with customers, which results from spending less time chasing needed information, (i.e., productivity improvement).

(ii) Increased Win Rates:

Win rates improve since companies can withdraw from unlikely or bad deals earlier on in the sales process.

(iii) Increased Margins:

Increased margins resulting from knowing customer better, providing a value-sell and discount prices.

(iv) Improved Customer Satisfaction Rating:

This increase occurs since customers find the company to be more responsive and better in touch with their specific needs.

(v) Decreased General Sales and Marketing Administrative Costs:

This decrease occurs since the company has specified its target segment customers, it knows their need better, and thus it is not wasting money and time, for example, on mailing information to all customers in all existing and potential target segments.

7. Purposes of Adopting CRM Processes:

(i) Develop better communication channels.

(ii) Collect customer related data.

(iii) Create detailed profiles of individual customers.

(iv) Increase customer satisfaction.

(v) Access to customer account history, order information and customer information at all touch points.

(vi) Identify new selling opportunities.

(vii) Increased market share and profit margin.

(viii) Increased revenues.

(ix) More effective reach and marketing.

(x) Improved customer service and support.

(xi) Improved response time to customer requests for information.

(xii) Enhanced customer loyalty.

(xiii) Improved ability to meet customer requirements.

(xiv) Improved quality communication and networking.

(xv) Reduced costs of buying and using product and services.

(xvi) Better stand against global competition.

8. Features of CRM:

A well- designed CRM has the following characteristics:

(1) Customer Based:

Customer Relationship Management is a customer oriented feature with service response based on customer input, one-to-one solutions to customer’s requirements, direct online communications with customer and customer service centers that help to solve customers’ questions.

(2) Automation of Sales:

Every sale transaction can be recorded, by tracking sales records that is name of a customer, purchase details etc. Firms have to install automation system to record such transactions. This function can implement sales promotion analysis tracking of a client’s account history for repeated sales or future sales and also coordinate sales. Helpline and call centres may be installed to keep record of customers.

(3) Use of Technology:

Firms make use of technology to keep detail information of customer needs. Use of ICT, Computer to store information, e-mail Systems, Mobile phone data and even paper note cards etc. storing all the data from all departments (ex- Sales, Customer service, marketing and HR) in a central location gives, management and employees immediate access to the most recent data when they need it.

It applies data warehouse technology in order to aggregate transaction information, to merge the information with CRM solutions and to provide key performance indicators (KPI). Such information is used to revise product and its marketing to match to need of customer and ensure effective CRM.

(4) Opportunity Management:

This feature helps the company to manage unpredictable growth and demand and implement a good forecasting model to integrate sales history with sales projections.

9. Functions of CRM:

CRM performs various functions for the marketing department of the organization.

These functions are as follows:

a. Managing Leads – It refers to generating and retaining potential customers.

b. Qualifying and Converting Leads – It refers to the assessment of generated leads to know potential and profitable customers.

c. Managing Opportunities – It refers to utilize every possible opportunity to get long-term benefit from customers.

d. Keeping a Track on Activities – It refers to capture information, such as customers’ buying pattern, quantity purchased, and time spent by customers in the store.

e. Managing Reporting and Forecasting – It refers to process input data, such as average time spent by the customers in the store and their preferences for the product.

CRM also performs several functions in one-to-one marketing.

These functions are mentioned in the following points:

a. Identify Customers – It refers to differentiate between profitable and non-profitable customers.

b. Differentiate the Needs of Customers – It refers to finding variation in the requirements of customers. The organization makes different groups of customers as per the needs of customers.

c. Customize Products and Services – It refers to the products and services produced as per the requirements of individual customers.

d. Build Stronger Relationship – It refers to establish a relationship between an organization and customers by facilitating a personalized way of communication.

10. Importance of Customer Relationship Management:

Looking at some broader perspectives given as below we can easily determine why a CRM System is always important for an organization:

1. A CRM system consists of a historical view and analysis of all the acquired or to be acquired customers. This helps in reduced searching and correlating customers and to foresee customer needs effectively and increase business.

2. CRM contains each and every bit of details of a customer, hence it is very easy to track a customer accordingly and can be used to determine which customer can be profitable and which not.

3. In CRM system, customers are grouped according to different aspects according to the type of business they do or according to physical location and are allocated to different customer managers often called as account managers. This helps in focusing and concentrating on each and every customer separately.

4. A CRM system is not only used to deal with the existing customers but is also useful in acquiring new customers. The process first starts with identifying a customer and maintaining all the corresponding details into the CRM system which is also called an ‘Opportunity of Business’.

The Sales and Field representatives then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. All this is very easily and efficiently done by an integrated CRM system.

5. The strongest aspect of Customer Relationship Management is that it is very cost-effective. The advantage of decently implemented CRM system is that there is very less need of paper and manual work which requires lesser staff to manage and lesser resources to deal with. The technologies used in implementing a CRM system are also very cheap and smooth as compared to the traditional way of business.

6. All the details in CRM system is kept centralized which is available anytime on fingertips. This reduces the process time and increases productivity.

7. Efficiently dealing with all the customers and providing them what they actually need increases the customer satisfaction. This increases the chance of getting more business which ultimately enhances turnover and profit.

8. If the customer is satisfied they will always be loyal to you and will remain in business forever resulting in increasing customer base and ultimately enhancing net growth of business.

11. Need for Customer Relationship Management:

Customer relationship management is a corporate level strategy focusing on creating and maintaining relationships with customers. CRM is a term not only used by the business organizations but also in any type of organizations to create a beneficial environment among the customers. This is a business approach that combines people, processes and technology to maximize the relation of an organization with all types of customers.

It helps in understanding the customer better and according to the needs of the customer; the organization can effectively customize their products and services in order to retain the customers and also to increase customer’s loyalty and satisfaction.

The ultimate purpose of CRM is to increase profit, which can be achieved mainly by providing a better service to customers than competitors. CRM enables companies to gather and access information about customer orders, complaints, preferences, and participation in sales and marketing campaigns. This information can then be used to better react to customer needs, automate some operations, and capture customer feedback to improve products and services.

The need of CRM arises because of the following reasons:

a. To enable the company to identify, contact, attract and acquire new customers.

b. To obtain a better understanding to the customers- their wants and needs.

c. To define the appropriate product and service offering and match it to the unique needs of the customer.

d. To manage and optimize company’s sales cycle.

e. To increase retention of existing customers through improved sales, service and support.

f. To identify cross selling and up selling opportunities.

12. Management of Relationship:

It is a strategy employed by an organization in which a continuous relationship or contact is maintained between the organization and its customers, Management of relationship can be between Business (BRM) and its Customers (CRM).

Relationship Management aims to create partnership between the organization and its customers rather than considering the relationship merely transactional. Customers who feel that a business responds to their needs are likely to continue using the products and services that a business offers and thereby maintain a long term relationship. Maintaining regular communication with consumers allows the business to identify potential sources of problems.

Such problems may relate to quality, quantity, packing, pricing of product and it’s a service and its marketing, regular and timely information can help a company to minimise and manage the problem and ensure customer satisfaction by attention to solve their problem. This relationship management can be understood clearly with the customer relationship management (CRM).

CRM is a system for managing a company’s interaction with current and future customers. It involves using technology to organize, automate and synchronize sales, marketing customer service and technical support. It is a strategy that is recognized broadly and implemented widely to both manage and increase the quality of a company’s interactions with a variety of customers.

This optimization primarily involves activities related to sales but may also involve activities related to technical support, marketing and customer service. CRM goal is to track, record store in databases and then data mine the information, make use of such information to adopt and marketing as per the wish of customer’s.

This will help in a way increases customer relations. CRM is a business strategy implemented at the company level involving all departments related to clients. Firms regularly collect feedback from customers to receive their views and complaints on the product and modify the product and its marketing to meet the expectation of customers.

A firm has numerous benefits of CRM like higher productivity in sales and marketing. Reduction in expenses, more accurate targeting and profiling, higher overall levels of profit and increase in market share.

13. Relationship Marketing Strategies:

1. Make Every Customer Interact:

The first strategy to build a strong customer relationship and make every customer interact. Each and every interaction with a customer is a gift and should be valued. Getting into the mind of customers and knowing their needs will help know what the customer want and try to give that.

2. Follow through on Commitments and Claims about Products or Services:

The business must make a specific promise to the customer and deliver on that promise if it intends to win the heart of the customer. False claims however should be avoided at all cost as it can harm the credibility. Promise made must be fulfilled.

3. Offer Benefits and Product Value that Responds to the Customer’s Desires:

Another positive step to build a strong customer relationship is to offer value to the customer. Customers should know that firms provide the best quality.

4. Treat Customers as Individuals who are Respected and Valued:

An retailer knows how difficult it is to find a customer and further retain such customer. Each customer is an individual his needs and preferences differ. His tastes and likings differ. Retailer has to understand such individual differences and try to meet each individual customers need.

5. Listen to Customers:

If complaints are handled properly and quickly then they become a gift to the retailer. Retailer should be available and accessible when customers have questions, concerns or comments. If the shopkeeper can listen to the customers that itself will help to develop a bond and relationship between them.

6. Build a Strong Brand Identity:

The customers should identify the products in the midst of the crowd and that is possible by creating a winning slogan, tagged with a catchy logo and a unique theme. Most important, if a specific promise is made they have to deliver on that promise.

7. Surround your Customers with Valuable Information:

Keep the customers informed on the latest trend, price or development by using emails, website content, social media and other methods of outreach. The firm must also make it easy for customers to reach them. Customer should be regularly updated with product its marketing and any change in that.

8. Business must have a Website:

The firms should consider making their website user – friendly and easy to navigate for new and existing customers. The World Wide Web (www) is making it easier for businesses to build a strong customer relationship with their customers.

9. Reward Loyal Customers:

Most of the business goes after new customers while forgetting that the existing customers need to be taken care of. Introducing a loyalty program is an effective relationship marketing strategy. Nothing strengthens a bond more than appreciation.

Thanking the customers for sticking to the brand will go a long way to make them know that they are very important. A simple thank you package might be all the business needs to connect personally with the existing customers.

14. Notes on CRM:

Customer Relationship Management (CRM) can prove a vital tool in ensuring the success of a business through enhancing customer loyalty. CRM recognizes that customers are the core of a business and that the success of a company depends on effectively managing relationships with them.

It focused on building long-term and sustainable customer relationships that add value to both the customer and the company.

The probability of selling is to a new customer standing at just 15 per cent, while the chance of selling to an existing customer is 20 per cent. Also, a typical dissatisfied customer will tell eight to ten people of his or her experience, with the primary reasons for dissatisfaction including, lack of customer services or poor customer services and busy phone lines and unanswered e-mails.

Seventy per cent of customers who complain about products or services are likely to conduct business with the company again if, the complaint is addressed quickly. 90 per cent of existing companies do not have the necessary sales and service integration to support E- commerce. Introduction of CRM to a business could address these problems and improve relations with the customers.

CRM overlaps with the concept of relationship marketing, but CRM has a broader take on the concept since it included a one-to-one relationship, focusing on the philosophy of treating every customer differently.

A company must continuously interact with customers individually as this kind of marketing can create high customer loyalty and in turn, help to add to the company’s profitability. However, as the world has turned more and more towards ever-advancing technology for solutions, many companies who have used CRM are now taking the concept to the cyber-world, through E-CRM. Through internet technologies, customer data can be easily uploaded into marketing, sales and customer service applications and analysis.

E-CRM also included online process applications such as segmentation and personalization. In a world connected by the internet, E-CRM has become a requirement for survival, not just a competitive edge.

Companies could start with a foundation service website with minimal design, but was functional. He outlined that then they could add many innovative web-related tools to enhance customer service and CRM such as personalized web pages, FAQs (Frequently Asked Questions), e-mail and automated response, troubleshooting tools and chat rooms.

The demand for complete relationship management is driving the need to integrate telephone, web and database technologies to provide a 360-degree view of customer attributes and account history.

Such integration means that a company could combine information on all products and services a customer uses and share this information across all delivery channels and points of contact.

While a production organization sells what it produces, a marketing organization tries to understand its customers’ needs and preferences, and produces according to their requirements. In a marketing organization, all departments are focused on satisfying the customer.

CRM or Customer Relationship Management is a buzzword for a set of software tools designed to gather more information about the customer. It is the information technology wing of a business strategy that aligns the organization around the customer, sharing information across all arms of business, and leveraging data from disparate sources to understand the customer and maximize profitability by anticipating his or her needs.

At Air India, for example – CRM is rather non-technical and focuses on quality of service. The airline has introduced reclining seats, established a call centre to handle customer queries, and sources food from the best restaurants.

It has introduced a frequent flyer programme in economy class, a maharaja club in first class and a leading edge club in executive class to attract customers. It also offers free travel for a companion to encourage the use of first-class seats.

All this seems to have paid off. Nearly 30 per cent of west-bound passengers in Air India have been added in the last year itself. However, the airline has not invested in expensive CRM, relying instead on made-at-home software. Clearly, CRM at Air India is about warm customer relations and good service rather than number-crunching technology.

CRM involves getting information about the customer from customer contact points. These contact points could be call centre’s, help-desks, e-mail or sale invoices. This customer data is stored, retrieved and analyzed for performance management. Information is extracted from the data by trying to discover patterns or trends connecting data.

This information is used to extract intelligence for making business decisions. CRM can thus help create an appropriate marketing mix for each customer. By understanding the customer, an organization can create a product that she wants, sell it at a price the customer can afford, design an interesting promotion strategy and distribute it in a manner that she finds convenient.

Shoppers’ Stop is one organization that’s customer-focused. Every one of its employees, apart from his or her regular designation, has an additional ubiquitous designation of ‘Customer Care Associate’.

Vikas Prabhu, senior manager, information systems, Shoppers’ Stop explains that the customer focus has pervaded the IT segment as well. Out of the almost Rs. 300 crore turnover, around Rs. 150 crore comes from Shoppers’ Stops First Citizen’s Club of 2.2 lakh regular buyers.

Points are given based on Recency Frequency Monetary value, which means people who purchase recently, frequently and more often get higher points. These points are used to determine discounts applicable on goods sold, or benefits under various schemes.

Shoppers’ Stop currently uses Microsoft-based technologies for data warehousing and data mining. However, plans are afoot to shift to Business Objects. Shoppers’ Stop also uses its software to keep track of fast and slow moving goods and can thus predict demand, plan purchase and stock goods accordingly.

On being queried why CRM is not catching up fast enough in India, Prabhu says that for CRM to succeed, the data warehouse needs to contain data of at least the past two years and this is possible only if the organization is focused on understanding customers to start with.

Often, changing business conditions compel organisations to implement CRM. Vivek Kale, CEO, Essar Information Technology, explains that earlier steel demand was predictable.

However, with manufacturing booming in China, demand fluctuates violently. So Essar Steel is planning to implement SAP-CRM to keep track of demand and prices, and route its production to the most profitable distribution channel.

CRM is important because understanding customer’s helps to get repeat business by changing organizational products and services in tune with the customers’ needs and requirements. It’s a philosophy born out of the understanding that it costs less to grow with an existing customer than to acquire a new one.

One just needs to look at the revenues of Indian software companies to realize this. Seventy per cent or more of the revenues of Indian software companies come from existing customers.

Moreover, the sales cycle in software is rather long – it takes six months to a year from the cold-call stage to closing the deal. Hence, many software companies lay stress on account management of existing customers as much as efforts to acquire new ones.

One would expect banks – which constantly interact with customers – to be pioneers in implementing CRM. However, V.K Khanna, general manager, department of information technology, Union Bank of India, explains that most banks have just implemented central banking solutions and are only beginning to consider data warehousing and data mining. Obviously, banks that lead in the process of utilizing technology to get more information about customers will steer ahead of the competition.

Once the preferences of customers are well understood, separate marketing strategies for disparate customer groups can easily be designed. Thus, by focusing on customer satisfaction, organisations can take on the competition and increase revenues and profits.

15. Benefits of CRM:

A complete view of all customer information, knowledge of what customers and the general market want and integration with existing product and services to verify how much does it match with customer’s needs. To consolidate all business information and gather feedback from customers, understand their needs and improve product or services and enable a firm to design and deliver the products as dreamed by the existing and prospective customers.

CRM system will gather data from a huge variety of source social media, online chat, customer calls etc. This allows the company to get a complete picture of what the customer want and how they feel about the products services. This gives the firm the opportunity to improve the offerings based on what the customers are saying.

Benefits of CRM are as follows:

(1) Provide Better Customer Service:

CRM system gives advantages such as the ability to personalize relationship with customers. CRM maintains Customer Profiles, there by treating each client as an individual and not as a group. This way every employee can be better informed about each customer’s specific needs and transaction profiles.

Better Customer Service improves the responsiveness and understanding which helps in building Customer loyalty. It also helps the company in getting continuous feedback from the Customers on the Product they have brought.

For Example:

LG Company always make a follow- up with its Customers on the items the, Customers have bought, so as to rectify the problem (if any) even before it gets logged as a complaint.

(2) Increase Customers Revenues:

Regular updation of customer information will help a firm to keep on revising its product and marketing strategy. Adaptation of product and its marketing to match the changing needs of a customer make the organisation customer friendly resulting in increase the sales and revenue.

(3) Discover New Customers:

CRM systems help the organization in identifying potential Customers by keeping a track of the profiles of their existing client, the business can easily come up with a strategy to determine the kind of people they should target so that it returns them maximum revenue.

(4) “Cross Sell” and “Up Sell”:

CRM system facilitates Cross-selling (offering customers complimentary products based on their previous purchases) and Up-Selling (offering customers premium products in the same category) It helps them to gain a better understanding of customers and anticipate their purchases.

For Example- (Cross sell – A Bluetooth head set along with the smart phone and up sell – Surf Detergent has introduced Surf Excel a better quality product.

(5) Help Sales Staff Close Deals Faster:

CRM helps the business in closing deals faster through quicker and more efficient responses to customer needs and customer information. The organizations have to implement CRM Systems effectively.

(6) Customer Loyalty:

Firms can gain loyalty of the customer by regularly understanding their needs and meeting their needs. Customer develops regular association with the firm due to the products and marketing style of a firm that is of customers liking.

(7) CRM Benefits Everyone:

It offers a win situation for everyone that is:

a. Customer is benefited as he gets product of his choice.

b. Retailer is benefited as he has less difficulty in selling the product.

c. Manufacturer is benefited due to regular sales.

16. Disadvantages of CRM:

Implementation of CRM system has following limitations for an organization:

(1) Investment:

A firms has to invest capital in developing the CRM system and technology to gather information about the customer regularly. Small firms with the limited capital may find difficult to install the CRM system in their organisation.

(2) Technology:

Collection of information regarding the customer’s needs and its regular updating requires use of modern information technology. A firm must not only have adequate capital but needs necessary knowledge to install and implement the technology.

(3) Liaison between Production Marketing and CRM Team:

CRM is undertaken to understand to needs of customer and accordingly device product and its marketing. It needs cooperation between manufacturer, retailer and their infraction with the final customer to know customers’ needs and accordingly market the product.

Lack of coordination between them will make the task of CRM unsuccessful. That is information collected must be communicated to manufacturer. Manufacturer must redesign product based on such communication. If the communication is not proper or manufacture does not respond to communication CRM will be in effective.

(4) Regular Exercise:

CRM is a regular activity it is not a one time affair. Firms have to regularly monitor to under and customer’s needs. The CRM system has to work 24×7 to regularly get feedback from the customers. In such case use of technology like, Website, Toll free communication, email may be effective.

(5) Wrong CRM Tool:

A mistaken tool choice may make CRM more complicated. So the companies need to consider in advance what kind of tools would be appropriate in order to follow its relationship with its customers.