Customer Relationship Management

Chapter 1. EXECUTIVE SUMMARY

Objective

My prime objective is to know about the functioning of

Customer Relationship Management & its contribution towards
Economic Development of the county

Primary Data
1. Canara Bank.
2. Mandvi Co.operative Bank.
3. www.crmsurvey.com

Secondary Data
1. CRM relating books.
2. Economic Times.
3. CRM Articles from South Indian Bank.
4. CRM in India.

Chapter 2. Customer Relationship Management

Introduction

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 Customer Relationship Management

Customer Relationship Management is all about understanding the

customer’s needs and leveraging this knowledge to increase sales
and improve service. Customer Relationship Management blurs the
boundaries between sales and services, and is used to unify a
company’s activities around the customer. The overarching goal is
to increase customer share and customer retention through
customer satisfaction. True Customer Relationship Management
requires relentless focus on the customer. That is it in a nutshell.

Just as a Roadmap will help you to understand the roads, you will
need to take as well as alternative routes, so CRM helps sign
companies make decision about the best route and objectives for
their situation.

Many businesses use CRM as a management tool for after the

prospect has been given to a customer, but to do this you must
attract the customer. Although CRM is great for managing
customer relationship, it can also utilized for marketing purpose
and you can squeeze out of the most of a system that saves
valuable time and improves relationships significantly.

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2.1. The Evolution Of Customer Relationship Management.

CRM must start with a business strategy, which drives changes in

the organization and work processes, which are in turn enabled by
Information Technology. The reverse does not work.
The seeds of modern-day CRM were sown in the 1960s. Academic
researchers found that the "4 Ps" marketing framework--product,
price, place and promotion was less valuable for industrial or
service-centric businesses where ongoing relationships were
critical. By the 1980s, "Relationship Marketing" was used to
describe this new focus on understanding customer segments,
delivering ongoing quality service, and achieving high customer
satisfaction.
Relationship marketing was about "putting the customer in the
middle of the business circle," in the words of Dick Lee, principal
of St. Paul-based Hi-Yield Marketing. "As part of that early
relationship marketing movement, we had untold frustration
because we didn't have the technology to support what we were
doing," Lee says. "It really wasn't until mid-90s that we had the
technology we needed."

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 Customer Relationship Management

In the 1990s, computer systems were deployed to support sales and

service processes. Sales Force Automation systems quickly
evolved from simple contact managers, while Customer Service
and Support systems became the backbone of automated call
centers.
By the mid-1990s, "CRM" became the umbrella term as it became
clear that sales and service systems should share information. More
recently, Enterprise Marketing Automation (EMA) applications
joined the CRM fold, including systems for customer analysis and
marketing campaign management.
By the late-1990s, the real action was outside the corporate
firewall. Explosive growth in Internet usage spawned a
proliferation of e-business applications to manage online customer
and partner relationships, often called "e-CRM" and "Partner
Relationship Management," respectively. Now, "multi-channel
CRM" systems were available to, theoretically, support direct,
Internet, and partner channels, while allowing users to use
whatever mode of communication they pleased.

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A)_Left Hand Meet Right Hand

Much of what satisfies customers, of course, is a company's ability

to preserve the "single face" of a customer. Some companies are
semantically confused and think the customer wants to see the
company's "single face." Customers don't care about that. What
they want is for the company to always see their--the customers'--
full faces.
Unfortunately, that's rarely the case. With the Internet, companies
in the present are still pretty bad about presenting a single face to

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the customer, says Jeet Singh, CEO of Cambridge-based ATG, Inc.

The Internet has blown the multiple touch point issue to the
forefront, and in many firms, the left hand doesn't know what the
right hand is doing. Customers might start researching product
information on a Web site, then pick up the phone to get a crucial
question answered, then do the actual buying with a local
distributor or retail outlet. The challenge now is for companies to
present that single face in all these real-world scenarios.
The root of the problem is simply the fossilized ways that
companies treat information--dump it in a "silo" (otherwise known
as a department, division, or business unit) and then defend it from
the rest of the organization. If figured out how to redesign
workflow to make
for happier customers, employee of the company taking a
jackhammer to functional silos, creating a lot of stress in an
organization that will probably resist such changes. It must have to
bend and reshape the internal technologies to support customer-
centric, rather than silo-centric, business processes.
"This situation is driving interest to new CRM approaches with
environments that can offer greater central control or
management," says Karen Smith, senior analyst with Boston-based
Aberdeen Group. "Organizations are demanding CRM solutions
that provide greater visibility into asset management, forecasting

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and inventory management, product development, procurement,

and order and transaction management."
It's clear that the Web is making the inefficiencies and
inconsistencies of big companies transparent to customers and
partners. To win the battle for customer loyalty in the future,
companies must shift from stand-alone business technology
approaches to systems that support the total customer experience
and work across multiple enterprises.

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2.3 CRM benefits

1) Strategic benefits

Customer relationship management does not enable a quick win. It

is a long-term approach that has to be adopted at a strategic level.
This is recognized in 90% of the organizations surveyed and
obviously has a high level of importance in a company’s strategy
to increase revenue.
However, the understanding of the strategic benefits of relationship
management still has some way to go. To a greater degree they
have understood the implications of customer relationship
management and have identified the risk to their business of not
doing so, namely loss of customers and competitive attack. They
have yet to look at the bigger picture and all of the associated
benefits that would enable their business strategies to be
successful.
In view of respondents customer relationship management enable
a company to reduce the cost of customer acquisition, Increase
customer retention, Improve cross selling of other products and
services and give established players the ability to react like a new
entrant
Respondents realize that the competencies required to deliver these
benefits are to deliver on its service promise, integrate products

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and service channels effectively, customize products, services and

prices, create opportunities for cross selling and delivery
mechanisms for the onward promotion of these products and
services, reduce time to market by allowing quick and effective
introduction of new products and services.

2) Functional benefits of CRM

Strategy formulation in today’s highly competitive environment is

the most important and difficult decision for any firm to make. In
response to the question on who in Organization will get maximum
strategic benefits of CRM Initiatives, majority of managers have
indicated that they consider strategy decision makers. IT and
Delivery sections would to the after sales according to the
managers follow immediate benefit.

3) Expected benefits
World-wide experience has shown CRM implementation increases
number of customers, increases customer retention rate by
retaining most profitable customers, increases customer loyalty and
helps in developing lifetime relationship with customers. Over
70% of the firms are highly optimistic in getting benefited on these

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parameters. Expectations are greater in increased customer

retention and loyalty.

4) CRM capabilities
Integration of interactive technologies and customer centric
business processes to identify, learn and predict buyer behaviour
and to create one to one marketing strategies.
A business strategy to create “intelligent” opportunities to retain
customers, up sell, cross-sell and ultimately customize products
and services.
A customer centric business intelligent system to create decision
support systems for efficient sales, marketing and service
processes.
Chapter 3. The Important Tools And Techniques

Introduction

Knowing what problems need to solve is 51 percent of the

solution. Walk into Home Depot and its inundated with a thousand
tools. It's hopeless-unless the person know that he needs a
screwdriver. That cuts 98 percent of everything available out of the
discussion. He needs a Phillips screwdriver. There goes another 1.5
percent. He has six dollars to spend and then down to a
manageable selection.

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Any technology works the same way. All those fancy gizmos, no
matter how pricey or complicated, are merely tools to solve your
business problems and improve your organization's ability to
please customers. Nevertheless, you'd be surprised about how
many CRM implementations court disaster by purchasing
technology with only a vague, sketchy idea of what tools are
actually needed.
Here's what you're likely to find in the aisles of a store full of B2B
collaboration tools:

1) Lead and Opportunity Management.

These tools help deploy sophisticated systems to target leads to the
most qualified partners, based on certification, geography, or other
business rules. These leads can then be accessed via a secure
extranet by the targeted partner. Next-generation systems will
allow vendors and partners to exchange leads and lead status
information through process integration, rather than forcing visits
to yet another portal.

2) Order Management.

Early on, vendors experimenting with e-commerce discovered their

channel partners wielded considerable market power and were
none too pleased to be cut out of the flow of business. Distributed

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e-commerce systems allow customers to visit a vendor's Web site,

do some research, then fill a shopping cart. The vendor's site helps
the customer pick the appropriate partner, based on geography,
price or other factors, and the shopping cart is electronically
transferred to the selected partner's site. This is great collaborative
e-business, leveraging the strengths of each party.

3) Service Incident Management.

Post-sales service and support is a costly fact of life in any

business. Collaborative service systems help glue customer service
processes together across multiple organizations. A customer
service request can be tracked across departments or companies
using a single Web page, much like tracking a shipment via the
FedEx Web site.

4) Integrated Marketing Portals.

Portals have limitations in B2B processes, but they're a great way

to reach consumers. Effective portal tools use XML to aggregate
content streams from multiple parties, and then syndicate this
information in a consumer-facing portal. If the content changes at
the source, it's changed in the portal automatically without
requiring a slow and costly traditional Web publishing process.

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5) Team Collaboration.

People still do the real work in complex selling and service

scenarios. Even with robust relationship management systems,
people still need to interact using e-mail, desktop documents,
project plans, etc. Collaboration tools allow companies to manage
this unstructured information via shared workspaces that can be
used by customers, partners and employees. Using such systems
can help an enterprise rapidly form teams and enable people to
work faster and smarter. That's a good idea in any economy.

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3.1. Market Overview

The once familiar and distinct territories known as the banking

industry, insurance industry, and securities industry are quickly
disappearing. Deregulation, technology, and global competition are
blurring the lines that traditionally defined the financial services
markets—geography, product offerings, and distribution channels.
The traditional means of doing business are also changing. Instead
of going to the bank or an insurance company, people will more
likely visit the automated teller machine (ATM), a kiosk, or
website, where they can also check their stock portfolio or
compare insurance rates online.

Customers, faced with an increasing array of financial products

and services, are expecting more from providers in terms of
customized offerings, value, ease of access, and personalized
service. For example, it is now more difficult for companies to
differentiate their products solely on price. Forward-looking
financial industry executives wanting to keep pace with the rapid
changes are seeking to better understand, respond to, and anticipate
the challenges of the new market places.

This white paper discusses the changing financial services industry

and then outlines the way in which solutions like PeopleSoft

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customer relationship management (CRM) can help financial

organizations build customer and channel loyalty, enhance
customer relationships, and increase customer, channel, and
product profitability, and market share.

3.2 Changing Competitive Landscape

In the financial arena, distinct industry sectors are giving way to

the concept of “financial services retailers.” This trend is
exemplified by mega-mergers such as Citicorp and Travelers.
Financial services companies are now able to combine to form
one-stop financial supermarkets where they can define themselves
by the customers they target and the distribution channels best
suited for those customers.
These trends are putting pressure on financial institutions to
increase revenues in a shrinking base of opportunity and to deliver
growth in shareholder value. With the market for retail financial
services suffering from overcapacity and the growing competition
from online providers, the industry standard of 10 percent to 15
percent growth in earnings per share is increasingly hard to
achieve. Companies are searching for greater economies of scale in
an effort to control costs and increase return on investment while at
the same time drive market share through cross-selling

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opportunities and global expansion.

Increasing competition, deregulation, and the internet have all

contributed to the increase in customer power. Technology has
reduced barriers to entry and exit for the customer, making it easier
to switch banks or brokers without feeling the pinch in the wallet.
Retaining customers and minimizing churn are both major
concerns for financial services institutions, and financial
companies need to effectively leverage existing customer
relationships and make better use of customer information across
the enterprise.

3.3 Fragmented Data and Legacy System Issues

Most financial services organizations have multiple repositories for

collecting the mounds of customer data generated every day—from
static data (e.g., names and addresses) to summarized transactional
data (e.g., interactions, callbacks, and sales). Customer
management issues are exacerbated when there are many
disconnected systems and no central location to capture all of the
accumulated customer data.

The systems that record customer orders and manage customer

payments are the transactional backbone of a business. All too

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frequently, however, each system has its own set of “customer

information.” For example, marketers may not be able to reach the
total potential customer base because operational systems, such as
billing or Enterprise Management (formerly called enterprise
resource planning) systems, typically hold customers in a file with
little or no meaningful relationships to other customers or people
associated with these customers. This is especially true of
household information, where it can be a challenge to associate
people who reside at the same address. A company’s ability to
effectively manage household
information is very valuable.
Examples include generating leads from among other family
members and being aware of the relationship of new or potential
customers to existing “premium customers” so as not to risk losing
that customer if a family member isn’t accorded appropriate
attention.

Historical data collected from legacy systems tends not to have

been collected in any standard form. Say, for instance, that a
marketer wants to execute a direct mail campaign aimed at all
CEOs in the database. For this campaign to be effective, the
system would need to record customer profiles in a structured
format.

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Many companies also find their customer data fragmented by

virtue of channel segmentation (e.g., broker or direct), by product
(e.g., superannuation or short-term insurance), or by company
organizational structure. Large companies are typically organized
into a hierarchy with a head office or holding company and two or
more subsidiaries plus branch offices that may or may not share
the same database. Customer data is often fragmented as a result of
mergers and acquisitions because each of the merged companies
maintains its own separate data.

The collection and integration of data into a single logical

repository that salespeople, contact center agents, and marketing
and support personnel can all use is crucial to a company’s
success. This can be achieved only if the front-end system that
interacts with the customer—call centers, internet, and branch—
also interacts with the back end—the billing, statements, and other
account information. Increasingly, product data is being exposed to
consumers (e.g., account balances in deposit accounts and portfolio
performance) so that the distinction between front-end systems and
back-end systems is dissolving to better satisfy the end customer.
The ability to view all customer interactions and information is
essential to providing the high quality of services that today’s
customers demand.

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Chapter 5. Information Technology Methods in Customer

Relationship Management.

5.1 Internet Architecture for the New Millennium.

Financial services companies need an internet architecture that

provides not only for multiple delivery and access channels
(personal computer, kiosk, and mobile devices) but also for further
detailed customer intelligence, focused marketing, and cross-
selling. Such architecture enables information to be accessed in a
standardized way, allowing information to be combined and used
across the financial services spectrum. It also becomes easier to
integrate other data sources such as geographical data sources and
credit reference agencies and information from partner service
providers. PeopleSoft CRM’s internet architecture provides such a
system.

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5.2 Technology for Collaborative Relationship Networks.

In the next five years, instead of just automating individual

channels, collaborative e-business solutions will support more
complex many-to-many relationship networks. In addition to
optimizing vendor-to-partner relationships, as PRM solutions do
today, collaborative solutions will ensure that the enterprise,
partners and customers can all work together in a profitable
relationship network or "C-Web."
The same competitive forces that caused CRM to become a multi-
billion dollar industry in a few short years are also driving C-
Webs. Competitive advantage based on a "hot product" is fleeting.
Increasingly, enterprises must create tighter, collaborative linkages
with partners, suppliers and customers, squeezing out time and
costs while enhancing the customer experience and total value
proposition. In the future, automating individual relationships, the
current state-of-the-art with multi-channel CRM, will not be
enough to create a sustainable competitive advantage.

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Traditional CRM is shifting outside the enterprise. First, to

customers and partners in the eCRM and PRM trends. Then, over
the next few years, to a multi-enterprise or "collaborative e-
business" approach to enable business process integration, content
management and work team collaboration. Goal: create, grow and
retain profitable networks of customer and partner relationships.
Sounds a lot like CRM, doesn't it, just updated for the
interconnected world, the real world in which we live.

Chapter 6 Customer Relationship Management with People.

6.1 The Organization of People and Information Must be

Client Centric.

The organization of people and information must support the need

to manage contacts, knowledge and information on a local and
global basis. Many corporate financial executives complain about
the difficulties in identifying and contacting the appropriate person
for a particular question or problem. Also, they complain about the
inability of some of their banks to provide a complete picture of
business dealings with the company.

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The corporate client prefers that a bank be organised on a sector

basis. Major corporate clients should have a dedicated individual
or team for each service area. They want the relationship manager
to be the focal point between themselves and the other resources of
the bank. They also want direct access to product and service
specialists who know them and the business they have transacted.
Sector specialisation should permeate the entire structure of the
corporate banking operation.
Corporate banking is a knowledge business. The bank's
information technology must support the communication and
networking of people, the accessibility and presentation of
information, the tailoring of innovative solutions and the efficiency
of decision making processes. Information must be comprehensive,
accurate and accessible providing a comprehensive picture of the
company, the sector, the bank's capabilities, the business
conducted with the bank and the business environment.

6.2 Usage of Customer Relationships Effectively.

A financial institution using its greatest asset—knowledge of the

customer—can turn the customer relationship into a key
competitive advantage by retaining those customers who represent
the highest lifetime value and profitability. Financial institutions

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develop customer relationships across a broad spectrum of

touchpoints—branches, kiosks, ATMs, internet, electronic
banking, smart cards, call centers, and phones. The shift of focus to
all aspects of customer interaction has brought demand for systems
that range from marketing and lead generation, to sales process
automation, customer information systems, and customer service
management.

The full integration of these systems, their associated business

processes, and the methods for which information is extracted and
used forms the basis for customer relationship management or
CRM. A CRM system links together the disparate customer data
residing in transaction systems into a single, logical customer
repository or several repositories that feed into one system. The
goal of CRM is to manage all aspects of customer interactions in
ways that enable companies to maximize the profitability of every
customer relationship.
CRM is not new to the financial services industry. The first
customer-focused software applications were single “point
solutions” for specific departments, such as Support or Help Desk.
Contact management and sales force automation (SFA) are
examples of point solutions that capture data on certain customers.
Banks and financial institutions have invested heavily in CRM,
especially in the development of their call centers. In the past, call

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centers were designed to improve the process of handling inbound

calls. In the future, they are evolving to encompass more than just
cost reduction and improved efficiency. In fact, according to
Gartner Group, by the year 2003, more than 80 percent of all banks
in the United States will develop their call or contact centers as
alternative delivery channels and revenue centers to be used for the
delivery of existing products and services, while only 10 percent
will develop them as strictly information portals (from The Role of
a Bank Contact Center: Still a Moving Target, Gartner Group, 1
August 2000).

But to be successful today, a company needs more than the ability

to handle customer service calls. It needs a comprehensive CRM
strategy—an integrated solution that involves every department in
the company. This includes not only call centers but also sales,
marketing, and support working as a team and sharing information
to provide a single view of the customer to anyone in the company
with appropriate security permission. For example, insurance
agents do not always have access to all of the pertinent customer
information. According to a large United States insurance
company, 70 percent of its incoming calls are from insurance
agents wanting information about its customers. This is a non-
revenue generating activity. CRM can streamline this process, by
enabling agents to access an insurance customer’s information over

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the web via a browser. Employees and customers using CRM

systems want assurance that every conversation But to be
successful today, a company needs more than the ability to handle
customer service calls. It needs a comprehensive CRM strategy—
an integrated solution that involves every department in the
company. This includes not only call centers but also sales,
marketing, and support working as a team and sharing information
to provide a single view of the customer to anyone in the company
with appropriate security permission. For example, insurance
agents do not always have access to all of the pertinent customer
information. According to a large United States insurance
company, 70 percent of its incoming calls are from insurance
agents wanting information about its customers. This is a non-
revenue generating activity. CRM can streamline this process, by
enabling agents to access an insurance customer’s information over
the web via a browser. Employees and customers using CRM
systems want assurance that every conversation.

The key to successful interaction is to understand the overall

relationship the organization has with the customer. This can be
accomplished with the aid of software that is easy to use and that
accurately tracks all aspects of the relationship so that the customer
receives a consistent experience no matter which interaction
method he or she chooses. A customer should be able to initiate

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contact with the organization through one channel, such as the

internet, and then complete the interaction through another, like the
call center, with seamless transfer of information between the
different underlying technology.

For example, insurance companies are constantly challenged with

effectively managing and resolving claims. This includes not only
managing the interactions between the many parties involved in
settling the claim but also defining the process behind prioritizing
and assigning the claim for completion. All too often customers are
asked to repeat the same information over and over again to
several different members of the insurance company who are
involved in resolving the claim. This extends the life of the open
claim and helps to foster the familiar perception of insurance
companies—that they are eager to collect premium payments from
customers but are not as eager to assist customers when it comes to
paying out a claim.

It is also important to understand the relationships that customers

have with their intermediaries, other customers, and potential
customers. For instance, a major bank denied an automobile loan
request from a young customer because of a lack of acceptable
credit history. It turns out that this person was the son of one of the
bank’s most profitable private banking customers, but this

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important connection between the two customers was not

documented anywhere and, as a result, the bank lost money. A
CRM system would help hold information about customers and
their contact people in meaningful ways.

The challenge for any CRM solution is to help identify the point at
which customer value balances shareholder value. Having an
integrated view of customer profitability, acquisition costs,
management costs, and lifetime value can provide such an answer.
The aim is to define an appropriate positioning strategy and to
build competitive advantage by targeting appropriate customers
with appropriate products at the points in their economic cycles
when they would be most receptive.

Chapter 7 Customer Relationship Management In Banking

A new type of financial organization is emerging that provides the

full range of corporate investment and commercial banking
products and services. This is a logical market development based
on the ability of companies to deal with fewer banks because they
offer the full range of products and the need for banks to achieve a
greater financial return through the provision of lucrative fee based
services. This increase in the scope of bank offerings will have a

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dramatic impact on client relationship management associated with

corporate banking.
The basis of business success in today's corporate banking market
is related to a bank's ability to design and deliver unique value
creating solutions for its clients. The desired role of the
relationship manager is that of a problem-solving professional and
company champion. Full service banks that best master this more
sophisticated way of doing business will theoretically have the
competitive edge.
To provide a better understanding of today's more sophisticated
relationship management requirements, I have been meeting with
financial directors and treasurers of major companies in the UK to
discuss their needs and practices and identify the best providers. I
led this research initiative in my capacity as a Senior Associate of
Capital Markets Partners, a network of specialist 'City' capital
markets advisors and consultants. Detailed findings are presented
in a series of sector reports as part of the Capital Markets Partners
British Large Corporate Banking Relationship Management
Survey. Below are some observations from the research that will
impact relationship management needs and practices.
7.1 Full Service Banking Advantages are Being Neutralized by
Disadvantages.

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Corporate financial executives acknowledge both advantages and

disadvantages associated with full service banking. Some of the
advantages include 'the simplicity of a one-stop-shop', 'a deeper
understanding of the company's needs' and 'the ability to save
time'. Some of the disadvantages include 'their knowledge is
generally less specialized', 'they tend to be less competitive /
hungry for business' and 'there is a potential for conflict between
the investment and commercial bankers'.
Several relationship specific disadvantages were recognized as
well. For instance, many clients are experiencing considerable
pressure from their banks to provide fee based advisory business as
a quid pro quo for loans, to the point of destroying the relationship.
Also, bankers who leverage the overall relationship to push
products that the company does not need or want are considered to
be wasting valuable time.
Surprisingly, it was also reported that some bankers were 'whining
and moaning' when they lost business to competitors, to the point
of destroying the relationship. Too many banks appear driven by
short-term deal making practices. Full service banks need to take a
long term view of the client relationship. They should not expect to
win all the business in the short term. Each business opportunity
presents a chance to learn and develop intellectual capital. This
knowledge when disseminated to other bankers faced with similar
circumstances becomes a valuable corporate asset. Personal reward

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programmes should recognize the value of knowledge generated

associated with failures.

7.2 Full Service Banking Relationship Managers - New Breed

of Banker.

Corporate financial executives expect their banks to provide a

single-point of contact for investment and commercial banking
relationship purposes. They want their relationship manager to be a
senior decision-maker with clout who can get things done for
them. The relationship manager is expected to be knowledgeable
of the company, its management, its financial needs and the range
of capabilities the bank offers. They are also expected to manage
the relationship proactively as a problem-solving professional
using their knowledge to tailor unique and innovative financial
solutions that will create company value.
There is a clear need for banks to invest in the continuous
development of this new type of banking professional. A large
proportion of the financial executives interviewed in the Survey
felt that it was 'important' or 'very important' for their relationship
managers to improve their knowledge of and interactions with the
company. The need for a well-defined career path and
development programme is especially critical given that the clients

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are also complaining about the lack of relationship manager

continuity.
The required skills of a full service relationship manager transcend
the skill set of the traditional deal making or lending banker. This
new type of financial professional will undoubtedly provide the
full service bank with a distinct competitive advantage given their
potential for tailoring unique solutions using a broader range of
products.

8.2 Indian Scenario.

1) CRM Market

The market is still at infancy stage. At present in India market size

is valued at around 5 million US $. And expected value in 2003 is
around 30 million US $.

Market currently dominated by the Siebel, Clarify, Sap, Peoplesoft

(Vantive), Oracle, QAD, NCR, VT Plex, Hyperion etc. Currently a
complete CRM solution is in the range of Rs 8-10 crores.

2) CRM Initiators

•Lakme Lever - Customer Kiosk Chain

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•Godrej GE - Call Center Management

•ICICI - one of the first organization to work upon it. It has
already spent millions in data warehousing and data mining
technology
•Orange (Mumbai) & Airtel(Delhi) - Pioneers in their own rights
in introducing data mining techniques to identify & reduce churn
rates

India will dominate e- CRM services (Sinha-co-founder and

president e-gain communications) There is a scope of over a
million e-CRM service agents on Indian soil by 2007, working up
to a potentially lucrative $ 20 billion industry, self service is the
thrust area which would used artificial knowledge management
where customer would get an intelligent response from the m/c’s.
This will make human and m/c work seamlessly together.

8.3. Issues to be Addressed for Strategic Planning and

Implementation of CRM in Indian Industrial Environment

• Infrastructure and Technological Requirements- Ease and

cost of all areas of implementation not just the solution.

•Training– Budget and areas of training for making CRM an

operational system and seamless process.

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• ROI- Identification of real return of investment for the business

in future. Developing models for customer value analysis and
measurement of lifetime value of customers especially in terms of
future profitability.

•Change Management- Changes required to be managed in

organizational philosophy and practices

•Shift from Reactive to Proactive CRM - Development and

implementation of proactive CRM

•Future- Whether the business can afford to sustain the ongoing

cost of CRM.

Chapter 9. Challenges to CRM

1. Evaluate and Plan

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CRM tools would be valuable when they are used to identify and
differentiate customers to generate offers and fulfill customized
solutions. CRM strategy and program development is a crucial
task. CRM tools in fact supplement CRM strategies. Therefore
appropriate strategy and excellent implementation are both needed
for successful CRM. It requires a holistic strategy and is an
enterprise wide operation.

Planning for CRM should be preceded by an evaluation phase,

analyzing the requirements of the user industry, finding out the
possible gaps or mismatch between the offerings and requirements
and then designing a CRM solution catering to the needs and
specifications of the user industry. Thus a shared vision of both
project team & end user could add value in evaluation and
planning for CRM projects.

2. Strong and Co- leadership

System integrators and strategists should work together with cross-

functional teams, as tackling any one competence alone will lead
to a dysfunctional business. One competence does not make
customer relationship management

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3. Customized Solutions

Most CRM systems allow for very little freedom to customize to

specific industry verticals. Successful customization is crucial for
increasing the market for CRM. As user industry’s needs emerge
from the products and offerings of the industry, CRM solutions
need to be industry or user specific.
Expertise in particular vertical industries will further strengthen the
competitiveness of CRM solutions.

5. Process Alignment

Channels are a delivery mechanism. The effectiveness of the

mechanism is achieved when it is seamless. There is a need for
developing fully integrated CRM capabilities supported by
business operations, business management and business
intelligence.

6. Customer Knowledge Management

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Development of customer knowledge management systems –

Integrating customers’ life processes with company processes- a
basis to develop customer driven strategies- Right to left thinking.
There is a need to develop an integrated CRM platform that
collects relevant data input at each customer interface and
simultaneously provide knowledge output about the strategy and
tactics suitable to win to front line people.

7. Change Management
Project team should record and report proposed changes and
explain the implementation problems in advance and also the
expectations from the users in changed management processes.
Organizational policies and procedures should be aligned to CRM
initiatives. There is a need for employee empowerment and
training for building the skills in new techniques.

8. Strategists and IT Joining Hands

It is vital to have deep expertise not only in CRM technology but

also the customer service process as appropriate strategy and
excellent implementation are both needed for obtaining successful
CRM. Companies have handed over the responsibility of CRM
implementation to IT Dept. They are focused on simply installing

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CRM software solutions without a CRM strategy or program in

place. The CRM initiatives must be viewed from a business
perspective. and this requires IT professional and strategists
joining hands and working together.

9.1 CRM Success

Strategy first, technology second. Business experts agree that CRM

projects go off track when companies buy technology first before
they have their CRM business goals clearly in mind. Therefore, the
first step is to develop a strategy to understand and anticipate the
needs of the current and potential customer base. Consider the
lifecycle value of customers, taking into account different groups
of customers, and which ones are likely to yield the highest returns
over the long run. Then select the technology and vendors to help
capture customer data and external sources, and consolidate the

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information in a central warehouse to add intelligence to the

overall CRM strategy.
Iron out the organizational and people issues. Companies must
overcome such issues before a system that ties analysis and action
can be fully effective. For example, marketing staffs and
salespeople don’t always communicate well, let alone share data.
This is particularly true in the traditional insurance industry where
independent brokers represent more than one company’s insurance
products. Marketing, sales, and service must work as a team and
share information. In order to facilitate sharing information, the
business users (not just management) must realize benefits to them
before they adopt and advocate shared information via any
software system.
Develop the right contact strategy. By knowing which offers and
incentives to offer to which customers and when, an organization
won’t over market to customers and it will build loyalty and
retention. Such goals can be at least as important as realizing cross-
sell opportunities.
Give the customer lots of contact points. Customer interaction
should happen through multiple touchpoints—direct contact,
telephone call center and interactive voice response (IVR), email,
fax, letter, kiosk, ATM, internet—and information from all
channels should be available to each.

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Integrate, analyze, and refine data. First, collect and consolidate

customer-related data from the customer touchpoints, current
accounts, non-account internal information (gathered from forms
completed by customers during the opening of accounts or during
loan applications), and external data sources (including credit
agency services, marketing agencies, and customer information
exchange). Next, integrate analysis across all customer touchpoints
and from additional customer profiling data measuring customer
profitability, customer segmentation, and customer retention.

Finally, once knowledge is gained from data integration and

analysis, refine and focus business processes and organizational
structures based on improved customer understanding. Using the
derived knowledge of the customer, various strategies, such as
one-to-one mass marketing, have the potential to enable improved
business and financial planning.
Change accounts into customers. The traditional approach in many
organizations has been to associate their customers with accounts
—to the point of calling the account the customer and vice versa.
Customers feel alienated when they are treated “like a number”
instead of a person with personal needs and a history. A
conventional account structure usually contains very little
information and recommendations about the people, their needs,
and relationships to other people and organizations in the

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marketplace. This limited view has arisen from a “product-centric”

concept of running a business where an account is the mechanism
to determine which products are to be billed and when.
Build customer loyalty by offering excellent service. In a
competitive marketplace where price is not a differentiator,
customers are easily lost through indifferent service. It can be as
simple as not calling a customer back when promised, through to
delivering an inferior product without prompt rectification.
Investment in a CRM system that tracks customer interactions with
the business and facilitates automating business processes
(workflow management) will lead to service excellence, paying
dividends in higher customer retention levels.
Improve profitability by matching channel cost to customer value.
Today, more than ever, it is important to identify the profitable
customers of a company, and to retain and grow them. This will be
achieved by regularly re-evaluating the profitability of all
customers— typically done by intensive analysis of information in
a data warehouse—and feeding back the revised profitability
indices to business users of a CRM system. A practical outcome of
this exercise can be priority call routing in call centers, where
profitable customers get preferential treatment.
Assign a CRM customer number to link customer accounts. A
single customer might have several accounts that may require

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linking to an identifying master customer number for telephone or

internet banking.

10.1 Growth on CRM

Industry forecasters are agreed that the markets for CRM software
and services will grow rapidly in the next few years. US researches
predict a worldwide market for CRM of $16.8bn by 2003 - up
from $3.7bn last year and representing a compound annual growth
rate of 49 percent. According to Researcher International Data
Corporation (IDC), from 1997 to 1998 the European market for
CRM grew by 47 per cent and expects this trend to continue
through 2003. It says that front-end applications - such as sales,
marketing and customer support - and help desk applications are
the fastest-growing segment in the applications market. AMR
research – CRM is a red hot business and an important issue for
managers. The market for CRM application is expected to grow to
$11.5 billion in 2002 from 41.2 billion in 1997.

CRM grows at 50% rate (Meta group market research report). The
world wide market for CRM will expand by 50% This means the
global CRM market worth more than 13 billion US $ in 2000 will
mushroom to 68 billion US$ in 2004.

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Chapter 11. Conclusion.

Relationship marketing is emerging as a new area of focus for

service firms in India. But these are mainly based on some loyalty
programs and investments in technology for enhancing the
capability of databases. Managers should ensure that while
investing in databases, technology, human resources and
relationship marketing programs, attempts should also be made to
develop milestones, which help them sustain these initiatives.
These milestones become benchmarks against which future
programs get evaluated. Measurement metrices get developed over
a period of time when one starts collecting information about
customers, their buying patterns, usage behavior, referrals, etc and
start linking them to the marketing programs. Successful firms take
a long-term strategic view of customer relationship management. It
cannot be solely managed through periodic programs. A holistic
approach which leads firms to develop customer centric process,
integrate technology through customer oriented approaches,
motivate employees to perform to their full potential through
empowerment are prerequisites for firms to successfully utilize
their customer knowledge to enhance relationships with their
customers.
Customer relationship management is do-able. Presently in India,
companies have wonderful opportunity to fully utilize the power of

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a CRM Software Solutions. It is unrealistic to implement all the

features and integration possibilities all at once. If a phased
approach is adopted in an planned manner with cross functional
teams implementing the customized solutions under the co-
leadership of both the IT and strategists, it will obtain the
appropriate approvals at each stage and organization will have a
successful CRM system to compete globally.

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