Sunday, June 30, 2013
1. INTRODUCTION
Generally
organisation's motive is to increase the sales of their products there by
increasing their revenue and profit. To attain this different organisations
follow different strategies. These strategies are of different types. For
example, giving discounts, giving warranties, etc., on their products to
attract the customers. To increase the sales the organisation has to maintain
good relations with their customers. To attain increase in sales the
organisation has to maintain some standards on their products.
We
can't satisfy our customers today merely by the quality of the products or
services we offer them. We have to 'know'
our customers and 'understand' their
needs. Customer Relationship Management (CRM) involves extending our
organisation to encompass our customers, and treating them the way we would
treat our near and dear ones.
In a
fiercely competitive market, ensuring customer loyalty is not an easy task.
Organisations must work hard to aim at customer satisfaction. But they are yet
to fully appreciate the fact that customer loyalty depends as much on
cutting-edge technologies like the Internet and the Web, as also on the
organisation's attitude towards their customers.
2. What Is CRM ?
Business must understand the
psychology of knowledged and demanding customers today: customers don't care
how a company stores its information, or that data from different sources must
be combined to give them what they want. They don't even care if they've called
the right department or not. All that customers are clear about is that they
want excellent and instant service. This basic customer need has given birth to
CRM.
3. Why Is CRM ?
There are several reasons why
CRM has become the most important factor of today's business:
·
There have been a significant number of changes in the
competitive business environment.
·
Feature proliferation has resulted in an increase in the
average number of customer transactions.
·
Customers are beginning to understand that companies are
compiling an enormous amount of data on them with the help of information
technology; so they become intolerant when this is not reflected or used
optimally in the service doled out to them.
·
In general, customer dissatisfaction is on the rise as a
result of increased expectations.
Here are some interesting facts to know about CRM:
·
It costs six times the effort to sell to a new customer than
to sell to an existing one.
·
A typical dissatisfied customer will tell eight to ten people
about his/her experience.
·
A company can boost its profits 85 per cent by increasing its
annual customer retention by only 5 per cent.
·
The odds of selling a product to a new customer are 15 per
cent, whereas the odds of selling a product to an existing customer are 50 per
cent.
·
70 per cent of customers with complaints will do business
with the company again, provided their complaints are handled efficiently and
quickly.
·
More than 90 per cent of existing companies don't have the
necessary sales and service integration to support e-commerce.
4. Goals of a CRM framework
CRM requires companies to juggle their customers' requirements and
demands at the same time. It is defined as integrated sales, marketing and service strategy that precludes
lone showmanship and depends on co-ordinated actions within the company. Thus,
CRM is a
business
framework for envisaging, designing and organising a repertoire of
customer-related applications.
The figure
summarizes the goals of a CRM framework, and each goal is briefly described
below:
Use existing relationships to grow revenue :
Businesses must create a
comprehensive perspective of the customer to maximise his or her relationship
with the company through up-selling and cross-selling; and enhance
profitability by identifying, attracting and retaining the 'best customers'.
Use integrated information for service excellence :
Customer information must be used for
better servicing by saving time and easing a customer's frustration: for
example, a customer should not have to repeat the same information while
dealing with various departments in an organisation. The challenge lies in
surprising your customers and showing them how well you know them by creating
complete and well-organised databases, and personalising services offered to
them.
Introduce repeatable
processes and procedures for sales:
With the proliferation of customer contact channels, many
more employees are involved in sales than in the past. In order to enjoy
continued success, companies must improve consistency in account management and
sales.
Create new value and instil loyalty:
Work towards becoming a company that has the ability to
respond to needs and accommodate request, a company well-deserving of customer
patronage, a company to which customers will remain loyal--this can be the key
differentiator, USP or competitive advantage of your business.
Implement a more proactive strategy:
Make an attempt to use a
customer-focused business solution that works across the entire enterprise,
instead of just gathering data and eventually using it. Eliminate issues before
thy reach the crisis stage, and move from reactive data collection to proactive
consumer relations that resolve problems on the first call.
5. A CRI Product Architecture
One of the most universally
applicable for text mining products is the IBM Customer Relationship
Intelligence product. It was designed to help companies better understand their
customer's needs and opinions about the company. This information allows an
organisation to retain and grow their customer base by developing a prompt and
clearer understanding of:
·
Customer needs.
·
Customer issues.
·
Industry and market trends.
·
Product issues, complaints and acceptance.
·
Competitive positioning.
The figure depicts the overall CRI (Customer
Relationship Intelligence) process. The steps involved are briefly defined
below:
Identification and Collection of Input
The first step in any data mining process is the
identification and collection of different prospective inputs. Each company can
assemble its own list of sources to be used as inputs. These usually include:
the textual results of customer surveys, focus groups (including the groups'
participants and the observations of the people running the group), letters
sent in by consumers, e-mails received (either unsolicited or in response to
specific offers or invitations), telephone calls in the form of transcripts or notes taken by phone
operators.
Input Standardization
After the sources of information have
been identified, the next step is to make them analysable. The work required to
standardise these diverse input sources will vary depending on the method of
collection.
Telephone call
responses can be collected by voice recognition units (i.e. systems that listen
to voices and create transcripts of what is said) and/or interactive touch-tone
systems (users input preferences by pressing different keys). Letters
and surveys can be read into the system by optical character recognition
systems, or through the translation and
transcription
of that input into textual form, e-Mail can usually be copied right into the
system. In all these cases, the different forms of input need to be converted
into a standard textual format, which the CRI product will be able to read and
interpret.
6. Analysis
After the input has been collected
and standardised, the CRI product is ready to run. Analysis is accomplished
through the following steps:
Preparation:
The input text is prepared, and core
customer data is coded (standardised and converted into the correct codes). In
this step, the key database identifiers are standardised, such as a customer's
age, sex, income level, date of input collection and so on.
Conversion of textual information into coded data
(linguistic accessing):
As part of this step, the textual
information is read into the system. The system is then able to interpret and
translate it into the predetermined codes earlier set by it. In other words, if
you are checking for whether the customer likes or dislikes something, you can
set the system to look for positive or negative statements, and then have those
coded into a 1 for positive and 0 for negative feedback from the customer. This
is accomplished by using the following four capabilities.
Tagger--A facility that reviews the input and
tags recognisable text, looking for things like the company name or product
name.
Expressions--A facility that looks for
known expressions and assigns the related code. For example, the expression
"I really like" will be coded as a positive response.
Terminology--A facility that looks for
a known terminology and assigns the related code, looking for special terms or
words that are specific to the industry or product.
Semantics--A facility that uses
semantic analysis of text, referring to the meanings that words and
combinations of words are meant to communicate.
Feature selection:
After the initial analysis of the
input has been performed, users are allowed to select those features that they
wish to have employed through the rest of the processing.
Clustering:
The now codified, but still raw, data
is then subjected to several forms of cluster analysis, including:
·
Simple clustering of 0 and 1 values.
·
Standard statistical frequency clustering.
·
Assignment of cluster values to each entry within the system.
Code storage:
The corresponding collections of
customer identification information and the codes derived are stored within a
customer characteristic database.
Report generation:
Finally, the users are able to
examine and analyse the feedback by simply running informational reports out of
the codified database. The system can produce output for HTML, ASCII, Lotus
Notes or other reporting formats. The report output depends only on the user's
ability to read and analyse relational data, since the codes and customer
information have been stored within.
6. Towards customer-centric
CRM architecture
To evaluate your business's position
with reference to Web-deployed CRM, ask yourself the following questions:
·
Are your applications designed simply to automate existing
departmental processes? (Business process re-engineering)
·
Are the applications capable of identifying and targeting the
best customers? (Profitability analysis)
·
Are the applications capable of realtime
customisations/personalisation of products/services based on detailed knowledge
of customer's wants, needs and buying habits? (Customer need analysis)
·
Do the applications keep track of the customer contacts? (Contact management)
·
Are the applications capable of consistent user experience
across all contact points? (Uniform
service)
The figure shows the
components of an integrated Web-based solution of CRM. The core processes in
CRM are:
·
Cross selling and up-selling.
·
Direct marketing and fulfillment.
·
Customer service and support.
·
Field service and operations.
·
Retention management.
Each one of these is
briefly described below:
Cross selling and up-selling
·
Cross- selling: suggesting complementary products.
·
Up-selling: suggesting a similar product with better quality.
·
Capability to qualify prospects, track contacts and refer
them to appropriate times.
·
Scheduling sales calls, keeping detailed records about sales activities,
and tracking customer order status.
·
Identifying customer life path needs.
Direct marketing and fulfillment
·
Selling well and delivering fast.
·
Influencing customers to bring them closer to the purchase
decision.
·
Tracking customer requests for information received via the
Web.
·
Campaign management.
·
Managing responses, qualifying leads and arranging event
logistics.
·
Providing information quickly and easily.
Customer service and support
·
Service request management.
·
Account management.
·
Contact and activity management.
·
Automating the helpdesk function.
·
Verifying customer status (what level of support are they
entitled to).
·
Monitoring service level agreements.
·
Incident management.
Field service operations
·
Hands-on approach to instil faith.
·
Hands-on extension of external customer support.
·
Knowing when the problem cannot be solved on the
phone/remotely.
·
Scheduling and dispatching troubleshooting teams to the
customer.
·
Managing inventory and logistics.
Retention management
·
Spending valuable time judiciously on customers who count.
·
Differentiating between customers, based on account and
transaction histories.
·
Effective use of DSS technology.
·
Gathering customer information of high granularity.
7.
Key success factors for CRM through the Web
In preparing for the success of CRM via the Web,
organisations will have to worry about questions like: How will the emergence
of Internet-delivered customer service affect traditional communication
channels of support? Will online customer service really be cheaper than
traditional support channels?
In addition, the management needs to
find answers to these questions:
·
How do we listen to our customers? Are systems in place to do
this effectively?
·
How can our call centre help to build customer loyalty? When
our customers call us, do they get courteous service? Are they satisfied when
the call is over?
·
Are we creating an integrated service experience?
·
Have we thought from the customer's point of view, while
creating a service experience?
·
Does our infrastructure allow the creation of new value
propositions?
Finally, the management’s road map to building
Web-based CRM architecture involves:
·
Defining a vision for integrated CRM -- a holistic view of the customer.
·
Understanding the customer -- "they are smart."
·
Developing a business case -- avoid using inferior technology
as an excuse for inaction.
·
Evaluating current readiness -- do DRP/BCP determine your
position with respect to competition.
·
Establishing CRM strategy and specific objectives in line
with overall company strategy.
·
Evaluating current applications for their ability to meet CRM
objectives -- look at the applications from an integrated viewpoint.
·
Taking the consideration, not the product or account view.
·
Identifying and targeting quick wins -- set aggressive but
realistic milestones.
·
Putting the ownership of the end-to-end project in the hands
of a single manager.
·
Implementation in stages (phase approach) -- building CRM
infrastructure isn't easy.
·
Being sure of creating a closed loop CRM environment.
·
Making sure that each CRM application is backed by concrete
measurement goals.
7. Conclusion
In summation, in order to
attract and retain customers, companies must not only anticipate and satisfy
customer needs, but also delight and surprise them. CRM is a combination of
business processes and IT, using which a company seeks to understand its
customers from a multi-faced perspective and answer questions like:
WHO are they?
WHAT do they DO?
WHAT do they like?
Research has recognised that effective management of
customer relationships is the basic source of competitive differentiation. CRM,
therefore, promises to remain one of the highest growth areas in the software
market well into the next century.
