1. CRM
Amazon’s CEO Jeff Bezos called Amazon.com the most customer-centric company in the world: "Our goal is to be Earth's most customer-centric company. I will leave it to others to say if we've achieved that. But why? The answer is three things: The first is that customer-centric means figuring out what your customers want by asking them, then figuring out how to give it to them, and then giving it to them. That's the traditional meaning of customer-centric, and we're focused on it. The second is innovating on behalf of customers, figuring out what they don't know they want and giving it to them. The third meaning, unique to the Internet, is the idea of personalization: Redecorating the store for each and every individual customer. If we have 10.7 million customers, as we did at the end of the last quarter, then we should have 10.7 million stores." (in Gregory 1999).
p. 9

2. 3. CRM - introduction
Evolution of marketing thought: production orientation -> sales orientation -> marketing orientation -> CRM.
CRM is characterized by a strong reliance on building relationships with key customers through the use of sophisticated information technology.
Customer relationships are assets that call for investment and can be managed in order to improve customer retention and profitability.

3. CRM
1 Introduction
CRM typically involves three general areas of business: a Customer service system, a Marketing information system and a Sales force management system.
Integrated CRM software is often also known as "front office solutions."

4. CRM
1 Introduction
Reasons for the growing prominence of relationship marketing:
The growth of the service economy.
The heightening of competitive intensity, which makes customer retention of paramount importance.
A high correlation exists between defection rate and profitability, and that to retain existing customers are much cheaper than to acquire new customers, and customers become increasingly profitable the longer the relationship lasts.

5. CRM
1 Introduction
Reasons for the growing prominence of relationship marketing:
Product-based advantages are increasingly short-lived, committed relationships are among the most durable of advantages.
Good relationships are hard for competitors to imitate, and there is no substitute for them that competitors can buy in the marketplace.

6. CRM Objectives
Provide product information, product use information, and technical assistance on web sites that are accessible 24 / 7.
Provide a fast mechanism for handling problems and complaints.
Use internet technologies to track customer interests and personalize product offerings accordingly.
Use the internet to engage in collaborative customization or real-time customization.

7. CRM Objectives
Provide a fast mechanism for managing and scheduling followup sales calls, scheduling maintenance, repair, and on-going support.
Provide a mechanism to track all points of contact between a customer and the company, and do it in an integrated way so that all users of the system see the same view of the customer.
Integration of CRM into other functional systems.

8. A Typical CRM System
Where did we stop last time. I am getting very forgetful. This morning I was sitting on the edge of my bed, and I couldn't remember whether I was going to bed or had just woken up. Yesterday I was standing at the top of the stairs, but I don’t know whether I have walked up from the G/F, or I was going to walk down.
Eg. Credit card.

9. 4 Customer Relationship Marketing
Characteristics of an asset that helps company to increase its competitive advantages:
It helps add value to the company's products or services for higher levels of customer satisfaction.
The asset is rare.
The asset cannot be imitated or copied easily by competitors.
There is no substitute for the asset.
Can CRM create assets that fulfill the above criteria?
CRM helps a company accumulate and boost the value of the following two types of intangible market-based assets (Srivastava, Shervani and Fahey 1998):
Relational asset created out of communication, bonding and trust between a company and its customers.
Intellectual asset created by studying the preferences and behavioural pattern of its customers.
Relational asset & intellectual asset cannot be ‘bought’.
They are the products produced by the interaction between a company and its customers.
A company must 'experience' and study these interactions to create the assets.
Therefore, these assets are owned only by the company. They cannot be imitated easily, nor easily substituted by other types of assets. Hence, the two assets meet the above four criteria.
The assets can be used to:
Lower a company's service cost and risks.
Knowing the customers enable a company to develop marketable products and services, thereby increasing the company's profit.
Facilitates one-to-one marketing and avoid cut-throat price competition.
Srivastava, Rajendra K., Tasadduq A. Shervani, and Liam Fahey (1998), "Market-Based Assets and Shareholder Value: A Framework for Analysis," Journal of Marketing, 62 (January), 2-18.

10. Customer Relationship Management
How CRM improves performance:

11. Customer Relationship Management
2 Definition of CRM
CRM is a comprehensive strategy and process that enables an organization to identify, attract and increase customer loyalty of profitable customers by maintaining long-term relationships with them.
It is a set of activities that involve gathering and analyzing accurate data on customers for the identification and satisfaction of key customer needs at a profit through coordinated efforts of different functional units of a corporation. These activities include focusing on key customers, organizing around CRM and knowledge-based management.
Attracting a new customer may be TEN TIMES the cost of keeping an old customer.

12. Conceptualization: CRM
Focusing on Key Customers
1. Key Customer-centric Marketing
2. Key Customer Lifetime Value
Identification
3. Personalization
4. Interactive Cocreation
Marketing
Organizing around CRM
1. Interfunctional Integration
2. Internal Marketing
CRM Orientation
Knowledge-based Management
1. Knowledge Generation
2. Knowledge Dissemination and
Sharing
3. Knowledge Responsiveness
4. Technology-based Knowledge
Management

13. Conceptualization: CRM
Focusing on Key Customers:
Key Customer-centric Marketing:
80% of profits come from 20% of loyal customers.
Key customers effectively subsidize a large number of marginal and, in many cases, unprofitable customers.
An overwhelming customer-focused mindset or culture perpetuating within the company.
Part of the problem is overloading the processor between your ears with more details than it can possibly handle. The upper limit for a human is between five and seven discrete things; given more than that, people tend to lump things together into higher classes and thus reduce the number of items to handle.
A neutral network program looks for patterns in its input so it can group similar items together and recognize them.
This universal guideline states that ‘80% of x comes from 20% of y, where the pair (x, y) takes on the values (sales, customers) or (complaints, customers) or (profits, sales), or whatever else you care to plug into the formula. In this case it would mean 80% of the sales come from 20% of the customers. This phenomenon actually has a basis in fact, and is called a Zipfian statistical distribution.
People tend to put too much importance on the last fact
Info. Overload 21 March 1996

14. Conceptualization: CRM
Focusing on Key Customers:
Key Customer Lifetime Value Identification:
For nonprofitable customers, the appropriate strategy is outsourcing or even “fire” them; or charge them a higher price for services rendered to them. CA
Personalization
Increasing diversity in demand.
One-to-one marketing through customized offerings.

16. Conceptualization: CRM
Focusing on Key Customers:
Interactive Cocreation Marketing
Cocreation marketing or “prosumption” involves both the marketers and the customer who interact in aspects of the design, production, and consumption of the product or service.
The interactive nature of the Internet and electronic CRM applications facilitate cocreation marketing.  
Cocreation allows a firm to get close enough to acquire not just the observable, but also the deeper tacit components of the needs and wants of key customers. 

17. Conceptualization: CRM
Organizing around CRM
Interfunctional Integration
All areas of the organization work toward the common goal of forging and nurturing strong customer relationships.  
Examples of organizational structural designs for CRM: customer-focused teams, cross-discipline segment teams, or cross-functional teams. All these designs pinpoint the importance of interfunctional coordination.
CRM means fundamental changes in the way that firms are organized so that CRM activities can be implemented effectively and efficiently.

18. Conceptualization: CRM
Organizing around CRM
Internal Marketing
Internal marketing means that a firm needs to satisfy the needs of employees and establish a good relationship with them (the means) before the latter would be motivated to help the firm establish a long-term relationship with customers (the end). 
A significant correlation between job satisfaction and employees’ service performance.  
Greater employee satisfaction results in higher adaptability, which is the ability and willingness of a service employee to adjust their behavior to the individual or extra demands of a customer. 

19. 3. CRM -Conceptualization
Organizing around CRM
Internal Marketing
Internal marketing comprises of:
Market training and education - customers are more satisfied with the service encounter when employees possess the ability and competence to solve their problems.
Clear role expectations & employee empowerment - employees who are unsure of their role expectations are likely to exhibit decreased job satisfaction and performance.
Employee empowerment refers to a company’s policy in encouraging employees to exercise their discretion in their job-related activities. Service employees are in a better position to satisfy customers when the employee has some control over the service encounter and has been empowered to react flexibly to customers’ requests.
During a service encounter, service employees typically need to handle special requests, and perform under adverse circumstances on top of responding to regular customer needs.

20. Conceptualization: CRM
Organizing around CRM
Internal Marketing
Internal marketing comprises of:
Reward systems -  behavior-based evaluation that involves evaluating employees on the basis of effort, commitment, teamwork, customer orientation, friendliness, the ability to solve customer problems, and other behaviors that are directed toward improved service quality should be used instead of evaluations based solely on measurable outcomes like sales volume achieved.  
Employee involvement.

21. Conceptualization: CRM
Knowledge-based Management
Knowledge can be defined as the valuable end product obtained from processing information, the latter itself being an end product of data processing.
Knowledge includes rules of thumb, generalizations, interpretations and insights that can be very useful for strategic decision making.
In an organizational context, knowledge is often incorporated in organizational processes, structures, and technology.
The success of a firm depends on the creation, transfer, and application of knowledge.
The key to sustainable competitive advantage in the past is ownership of physical and financial resources. Nowadays, it is the ownership of knowledge, a kind of resources from the resources-based perspective of management theory.

22. Conceptualization: CRM
Knowledge-based Management
Knowledge-based management includes:
Knowledge Generation - data must be captured at various points of contact with customers, and from interactive feedback systems that gauges customers’ viewpoints and their expectations.
Knowledge Dissemination and Sharing
Knowledge codification facilitates knowledge dissemination and sharing, and helps to transform local knowledge into organization-level knowledge.
Customer knowledge is shared and should be made available at every point of contact.

23. Conceptualization: CRM
Knowledge-based Management
Knowledge Responsiveness
Technology-based Knowledge Management

24. Antecedents of CRM
Top management support- CEO must have the right state of mind and commitment, and must give clear signals and establish clear values to the entire corporation regarding its commitment to the CRM concept.
Good interdepartmental relations based on reciprocity and trust.
A corporate culture characterized by market-driven sentiments.
Departmentalization, formalization and centralization inhibit CRM.

25. Consequences of CRM
Improved ROI, sales growth, customer retention and market share.

26. Moderators of the CRM - profitability link
Government legislation and public pressure towards privacy, price discrimination etc.
Whether or not target customers prefer customized products and services, which is usually more expensive.
Customer relationship proneness.
Degree of competition.

27. Moderators of the CRM - profitability link
The weaker the economies, the stronger the relationship between CRM and business performance.
Industries that have high diversity in demand and low cost of adaptation (e.g., service firms) will be at the forefront of CRM practices. Conversely, industries in which the cost of customization in production is high and the majority of customer requirements are not variable will not see the rapid expansion of CRM.

28. Customer Relationship Management Steps:
a database of customer activity, analyses of the database,
given the analyses, decisions about which customers to target,
tools for targeting the customers,
how to build relationships with the targeted customers: Reactive service is where the customer has a problem (product failure, question about a bill, product return) and contacts the company to solve it. Most companies today have established infrastructures to deal with reactive service situations through 800 telephone numbers, faxback systems, addresses, and a variety of other solutions. Proactive service is a different matter; this is a situation where the manager has decided not to wait for customers to contact the firm but to rather be aggressive in establishing a dialogue with customers prior to complaining or other behavior sparking a reactive solution. This is more a matter of good account management where the sales force or other people dealing with specific customers are trained to reach out and anticipate customers' needs.
privacy issues, and
metrics for measuring the success of the CRM program: Some of these CRM-based measures, both Web- and non-Web-based, are: customer acquisition costs, conversion rates (from lookers to buyers), retention/ churn rates, same customer sales rates, loyalty measures, and customer share or share of requirements (the share of a customer's purchases in a category devoted to a brand). 26 All of these measures imply doing a better job acquiring and processing internal data to focus on how the company is performing at the customer level.

29. Customer Relationship Management
Other CRM technology add-ons:
Call-back.
Automated response.
Interactive chat.
Voice over Internet Protocol (VoIP).
Press one if u still have a hand – Afganistan.
By pressing a button on the company’s web page, the customer requests a call-back from a customer service representative. The customer/user provides information in a predetermined format that includes phone number, nature of problem or request, and preferred time for the call-back. His or her request is then routed through the respective call center and matched to the appropriate customer service representative based on the user's language, product/model, and/or Web page last visited.
for which there is no existing solution in the knowledge base is directed to customer service representatives or elsewhere for response.
The customer's request is routed through the respective call center and matched to the appropriate customer service representative based on language, product/model and/or Web page last visited.
By pressing a button or a link on the company’s web page and by using headphones and a microphone attached to their computer, the customer initiates an Internet Protocol telephone call to their respective call center. Like above.
Collaborative browsing (also known as co-browsing) is a software-enabled technique that allows someone in an enterprise contact center to interact with a customer by using the customer's Web browser to show them something.

30. Customer Relationship Management
Points to note:
Make simple queries or data requests into self-service transactions.
Use to respond to complex product support transactions that do not require an immediate response.
Use human intervention capabilities to provide sales and complex product support for transactions that require an immediate response.
When customers want to place orders, view product and service offerings, or maintain personal profile information, create user-friendly applications that make it easy to accomplish these tasks. For qualitative information, develop a knowledge base that allows customers to perform natural language searches to get answers to simpler questions. None of these self-service capabilities requires human intervention.
Once self-service options have been attempted and customers have not found exactly what they need, then becomes an appropriate channel of communication for answering complex product support questions that do not require an immediate answer. Customer service representatives can perform research using internal knowledge sources to create a thorough response to a customer's unique question. Auto-response should be reserved for acknowledging receipt of a customer's and confirmation of customer data updates or transactions.

31. Customer Relationship Management
eCRM services chart.
See also
Problems with CRM:
High failure rates of CRM implementation -- reported by analyst firms and the media as reaching up to 70 percent.

32. 3. CRM - challenges
High failure rates of CRM implementation -- reported by analyst firms and the media as reaching up to 70 percent.
Overall, CRM users and evaluators are not very satisfied with the software.
Difficulty of implementation.
Standardized products offering less adaptation to users’ unique requirements.
Disjoint CRM systems.
Costly esp. for SME.
This is because customers still get used to have real people to serve but not self-serve. Besides, with the enhancement of customer interaction and the increase of communication channels, support staff takes much time each day to answer s and calls than ever.
Natural language systems are very complicated to program properly. Giant athletic shoe manufacturer Nike, for example, recently entered a deal with natural language search engine Ask Jeeves to implement "Ask Nike." The service supposedly lets customers ask questions in English about Nike products and services. However, it turns out that the Nike iD always responds with "We're sorry, but Ask Nike was unable to answer your question." (see
One application, handle all. CRM software vendors tantalize businesses with the promise of seamlessly connecting their Web, , call center and other customer-facing operations. The payoff, according to the vendors, is a transparent and consistent interface with customers-and a "360-degree view" of them. But key portions of this integration end up missing or disjointed. Once most companies take a close look at the technical and organizational challenges of unified customer service, they temper their big ambitions-or phase them in gradually.
Most of the CRM vendor solutions targeted at large enterprises but do not adequately serve the needs of this market. Overly complex and expensive for smaller operations. The costs of these applications can range from hundred thousands to millions of U.S. dollars to purchase and install.