Customer Relationship Management (CRM)

CRM is about acquiring and retaining customers, improving customer loyalty, gaining customer insight, and implementing customer-focused strategies.
It is about building strong relationship with the client and developing relationships with customers on an individual basis and along with this, learning and understanding customers better so that one is able to offer the right products/ services at the right time.
A true customer-centric enterprise helps a company drive new growth, maintain competitive agility, and attain operational excellence.

Some of the salient points of CRM common to most interpretations are:
• Customer acquisition
• Cross-selling and up-selling
• Customer retention
• Conducting all activities profitably

Converting a prospect to a customer is not only time consuming and effort intensive, but also more expensive than cross-selling another product to an existing customer. Further, it has also been found that the longer a customer stays with an organization, the more likely he is to avail of other products. This translates directly into higher profitability over the long run. In fact, the most practical and business interpretation of Customer Relationship Management is that an organization should be able to sell all its products to its customers as they progress along their life, also sometimes referred to as Life Cycle Marketing. For example in case of a bank, a customer should be able to avail of a savings account and a credit card at the start of their career, followed by equipment and automobile loans, and then graduating to buying insurance products and mortgages – all with the same bank.

However, with intense competition for the same set of customers, as well as greater customer inclination to “shop around” for the “best deal”, effective Customer Relationship Strategies are required to acquire customers, cross-sell and up-sell products, and to retain these customers over the long term – profitably.

In this dynamic scenario, there is also increasing pressure on managers to anticipate their customer’s requirements, and be ready to fulfill these at the earliest. For example, credit card customers with an unblemished repayment track record but not owning any vehicle can be cross-sold automobile loans at a concessional interest rate. Such a campaign will identify a new set of prospects and attempt to convert these at lower acquisition costs compared to a mass mailing exercise.

Yet, cultivating a relationship while building market has to be profitable. While conceiving innovative services and delivery channels is important, these are often expensive. A smarter alternative is, to strive for greater customer focus, zero in on relationship marketing and develop effective customer retention plans. This not only helps in identifying existing profitable customers, but also helps in devising new retention strategies to protect them from ‘poaching predators’.

However, the effective harnessing of technology remains a prerequisite to managing customer relationships effectively. These effective techniques involve the use of sophisticated models to predict customer propensity to buy and stay loyal to an institution. At the core of this technology resides the customer database, which helps integrate statistical modeling, campaign management, contact history, as well as response tracking components of various marketing campaigns. The management of this customer database in turn is known as “Database Marketing”. This system also enables managers to source data from the customer database and other transaction processing systems to identify and analyze transaction and customer level trends.

A Data Warehouse for Customer Relationship Management must include the following key features to support the marketing lifecycle:
• Prospect and customer focus
• Record all relevant facts of the relationship over time
• Integrate external prospect lists
• Score the customer database many times for subsequent periods.
• Predict future behavior of a customer based on past behavior
• Analyze different campaigns and treatment strategies over time and across a large number of transactions and customers