ENTREPRENEURSHIP

Course Leader: Dr. Ram Kumar

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Chapter- Five

CRM

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Introduction
● CRM is the development and maintenance of mutually beneficial long-
term relationships with strategically significant customers

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Introduction
● CRM is concerned with the creation, development and enhancement of
individualized customer relationships with carefully targeted customers
and customer groups resulting in maximizing their total customer life-time
value

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Introduction
● CRM is ultimately what the company defines it to be depending on their
business objectives…

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Objective of CRM
● Creating value for the customer
● Creating value company over the long term
● Organizations to gain competitive advantage
● Increase in customer service
● Increase efficiency
● Lowering marketing cost
● Aiding the department

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Benefits of CRM

Quality and
efficiency

Decision Decrease in
support overall
costs

Increase Customer
profitability attention

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Benefits of CRM

Quality and
efficiency

Decision Decrease in
CRM
support overall
costs

Increase
profitability

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CRM MODELS

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CRM
● Customer management has three distinct factors; namely, acquisition,
retention and penetration, in order to be successful in the CRM
implementation strategy (Buttle 2009).

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1. The IDIC Model
● The IDIC model was developed by Peppers & Rogers and the model
suggests that companies should take four actions in order to build closer
one-to-one relationships with customers:
● Identify who your customers are and build a deep understanding of them;
● Differentiate your customers to identify which customers have most
value now and which offer most for the future;
● Interact with customers to ensure that you understand customer
expectations and their relationships with other suppliers or
brands;
● Customize the offer and communications to ensure that
the expectations of customers are met.

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 customer

Operational CRM

identify Interact

Analytical CRM

Differentiate Customize

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 Information to the organization, about the
customers and their needs

Identify your Differentiate Differentiate Interact with Customize

customers as your your the your
individuals customers customers customers products and
and let them by their by their according to services, to
feel you value the needs from their values customers
know them organization the and their needs
organization needs

Information to customers,
The “value Sieve” about your ability to cope with
their needs

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QCI Model
● The Quality Competitive Index (QCI) model is a type of customer
management model. According to this model, a business needs to
perform certain tasks that help in acquiring new customers and retain old
customers (Starkey & Woodcock, 2002).
● The model is very different from other CRM models as it focuses on
customer ‘management’ rather than relationship building. ‘Customer
management’ means giving importance to impulse buyers.
● Described as a customer management model rather than a
customer relationship model, the Quality Competitive Index
model focuses on three main activities: acquisition,
retention, and penetration.

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QCI Model
● The QCI model helps to review the current practices and create a
quantitative approach to improve customer management process.
● The model is made up of eight elements:
● analysis and planning,
● information technology,
● proposition,
● people and organization,
● process management,
● customer management activities,
● customer experience and,
● measurement of effect.

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QCI Model
● The core element of this model is its customer management activities,
which include acquisition, penetration, and retention. The supporting
elements are people and organization, while these are affected by
customer experience and external environment (Grazdane, 2013).

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Analysis And Planning
● The process of customer management starts with an analysis of customer
behaviour and planning to develop the value of the company. The
business can then plan to design customer management activities for
engagement.
● The analysis and planning are based on the REAP of customer
management activities, which is Retention, Efficiency, Acquisition, and
penetration (Starkey & Woodcock, 2002).

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Proposition
● The ‘analysis and planning’ is the base of customers and their needs,
leading to effective planning. The next element of the QCI model is
coming up with the ‘proposition’.
● The proposition includes processes that can attract new customers, which
depends upon the evaluation of the needs of the customers in the
previous step. The segmentation of customer needs to form the base for
different propositions. This further helps to derive enhanced customer
experience and engagement strategies (Eko, 2014).

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Information and Technology (IT)
● Information and technology is an enabler in managing customers as well
as customer-related data. Technology helps deliver critical information
related to the customers to the organization and vice-versa. Thus
Information and Technology systems need to be updated constantly to
effectively manage customers and people, as per the changing needs of
both entities. This element includes important sub-processes such as:
● sourcing customer information,
● planning and analyzing information,
● management of quality and review of technology systems
for replacement and renewal (Grazdane, 2013)

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People and Organization
● A business cannot manage customers without a robust team of customer
relationship executives. As per the QCI model, the business needs to
develop and maintain a responsible team for:
● managing customer requests,
● feedback,
● queries and concerns.
● Also, businesses need to establish a system for role identification, task
segregation, and conduction of gap analysis for training
(Ahmadi, Osmani, Ibrahim, & Nilashi, 2012)

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Process Management
● Coordinating marketing, sales, and customer support are essential for
customer management, as per the QCI model.
● According to this model, a consistent process which provides continuous
management support to customers and identifies shortcomings is
important. This is the importance of ‘process management’ element
(Shukla & Pattnaik, 2019).

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Customer Management Activity
● This element of the QCI model has three sub-categories of activities,
governed by efficiency in all (Hollensen, 2010):
● Acquisition: It includes targeting of customers and getting to know their
needs for developing products/ services. The execution of this activity
involves effectively putting across the business’s propositions after
identifying the customers and their needs.

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Customer Management Activity
● Penetration: This sub-activity includes understanding the customers
through the collection of information, which can be then processed to
understand how to best create a valuable customer base. The activities
involve simple messages to welcome customers to the organization,
provide an understanding of the business activities and helping
customers connect with the business goals.
● Retention: This can be done through value development, as well as
through win-back strategy. This strategy serves as a retention process
and an acquisition process

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Measuring the Effect
● This element involves the assessment of the process to ensure
continuous improvement of the customer management process.
● The measurement also helps understand the level of performance of
individuals and teams on their roles and creates benchmarking on
customer management success (Srivastava, 2013)

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Customer Experience
● Addition of customer experience to the customer management mix
provides an additional layer of measurement. It bridges gaps in customer
perception and customer enhancement processes (Grazdane, 2013).
● The QCI model provides a detailed process of how to establish a
connection with customers, cordially interact with them, and customer
management. The model also accepts the role of external environment in
impacting customer experience and provides an understanding of how to
counteract any negative aspects by making sure the foundation
of the CRM processes.

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QCI Model cont’d…

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3. CRM Value Chain Model
● A value chain is a high-level model developed by Michael Porter that
identifies the processes a business uses to develop an end product or
service for the customer.
● The goal of the value chain model is to identify and prioritize the most
valuable activities to the company and improve processes to gain a
competitive advantage.

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3. CRM Value Chain Model
● The CRM value chain model applies this principle to customer
relationships. This CRM model observes all the stages and activities
required to build a relationship with a customer.
● These activities are divided into two stages: primary and support.

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3. CRM Value Chain Model
● The primary stage of CRM has five main processes that enable the
strategy.
● Customer portfolio analysis: Similar to the IDIC model, the first step of the
value chain model is to analyze your customers to identify your
customers who create the most value for the company. This analysis
stage helps companies understand their customers so they can better
address their needs and expectations and develop strategies to maximize
their lifetime value.

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3. CRM Value Chain Model
● Customer intimacy: The next step is to engage with the customer and
build on the original database of information. At each touchpoint,
companies should be collecting data on the interaction in order to better
understand and serve their customer. The better you know your customer
(and adjust your service accordingly), the more likely you are to retain
their business over the long term.

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3. CRM Value Chain Model
● Network development: A business’s network includes all people and
entities involved in the value chain, including partners, suppliers,
customer service, investors, etc. The goal is to use your customer data to
inform the processes at each level of your network so that the entire
system works together to optimize your customer’s experience.

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3. CRM Value Chain Model
● Value proposition development: Armed with your customer information
and interaction data, you can create value for your target customers. The
idea is to shift the focus from the product to your service and to reduce
process costs to create more value for the customer.

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3. CRM Value Chain Model
● Relationship management: The last stage of the value chain model is to
manage your customer lifecycle. This process involves evaluating your
business processes and organizational structure to manage acquisition,
retention, and customer development.

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Support Stage
● There are five supporting conditions necessary in order to effectively
implement the strategic processes of the primary stage:
● Leadership and culture
● Procurement processes
● HR management processes
● IT/data management processes
● Organization design
● Creating and developing these underlying conditions will
support a successful CRM value chain implementation.

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Conclusion
● Customer relationship management (CRM) is a widely implemented
strategy for managing a company’s interactions with customers, clients
and sales prospects.

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Discussion Question of the Chapter
● Define what CRM is
● Discuss CRM models
● Discuss objective of CRM

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ANY QUESTIONS

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THANK YOU!

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