CRM- Emerging Star of Marketing

Posted in Operations & IT Articles, Total Reads: 959 , Published on 09 August 2015

In today’s world internet has completely changed the rules of Marketing. With the advent of the social networking sites, slew of apps on the smart phone, e-commerce which is ready to serve the customer on their doorstep the world for the Marketers is changing very fast. Customer has many options now and he is also a lot more aware than he was 5 years ago. Customer wants a number of options from which he can choose but he will also like relevant options.

If things are not as per his desire he will take no time in changing from one brand to the other. Customer loyalty is an expensive thing these days. This change in the customer’s behaviour has forced the Marketers to resort to new ways of marketing. Before internet era Marketing was all about Bill Boards, TVC, radio Ads and print Ads. Today presence on Facebook, Twitter, LinkedIn is a must. Also you need to have a good idea of your customer’s profile and his interest before you market to him. If you are not relevant to him you will be blocked, TVCs can be skipped with the help of the recording feature of the set top box, So the only way left to the Marketers is to identify what the customer is actually looking for and present him the relevant options. Organizations have realized this aspect of the customers and they have already started working on this. Customer Relationship Management (CRM) is the way that companies have resolved to.

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What is CRM? :- In layman terms CRM can be visualised as a dynamic database which contains information about the customers or the prospective customers(also called as Lead). With the help of this information various activities are performed which can be pitching for a new product, after sales services, loyalty program for an old customer, etc. The whole purpose of the CRM is to measure the customer lifetime value of a customer and then segregate your customers as per their value. Most valuable customers will get best of the offers and the company will not like to lose their customers. Thus with the help of CRM an organization is able to know where the most profitable of the customers are present and hence where to put in the money for maximum returns.

What CRM comprises of ?

A CRM can be divided into three main parts:- Operational CRM, Analytical CRM and Collaborative CRM.

a. Operational CRM: - This is further divided into Sales Operations, Services Operations, Marketing Operations and Technical Support.

b. Analytical CRM: - This comprises of Data warehouse, Data mining and visualization, Business Intelligence and ERP Systems.

c. Collaborative CRM :- Methods and Technologies to facilitate internal(within the organization) and external(from the organization to customers) communication.

How CRM works? It is important to start with the Analytical CRM to understand the complete flow of CRM. Data Warehouses store the information of the old customers as well as the prospective customers. Generally the details of the customers are captured at the point of sales. Details of the prospective customers are captured when they visit the company’s website or show interest in buying something from the company but because of some reason they don’t make the purchase. Data mining and visualization is necessary to provide the right information to the right person at the right time. This can be very well explained with the help of an example.

At times it is possible that Marketing Team of an automobile decides to run a campaign for the test drive of the new model of the car that they have just launched. Now they want to give gifts to all their old customers who had purchased a car model “X” and are willing to test drive the new model. The Marketing Team decides that they will like to communicate this to this segment of their old customers through Emails and SMSs. They will ask for this information from the Analytics CRM Team. The Analytics CRM team will search for this information in their data warehouse. The Analytics Team will use their queries on the database to connect various databases which will ultimately give the desired information to the Analytics. This part of Analytics where logics and rationale are decided for extracting information from the data warehouses comes under Business Intelligence. Then the final task of the Analytics team is to transform the data into charts, tables, graphs etc as per the need of the Marketing Team. Thus the details are given to the Marketing Team so that they can execute the campaign on the desired target segment. Now the work of the collaboration team is to develop the creative for the campaign. Separate creative will be prepared for the SMS as well as the Email. The Creative should be attractive as well as should deliver the intended message. After the Creative is sent to the target segment the next task is to capture the responses from them. The responses will be divided into categories: - a. Hot b. Warm and c. Cold. “Hot” are the ones who are willing to buy the new model soon. They need a regular follow up which can be as frequent as once in two days. “Warm”:- are the one who are not yet decided but may buy in next 6 months. The follow up can be once in a week. “Cold”:- They are the ones who have no intention of buying the car and hence no follow is required for them. Thus by segregating the target segment into the three categories the Marketing Team knows where the leads are and accordingly they can plan their next campaign. Thus only the interested candidates will receive the relevant Emails or SMSs.

There will be two definite benefits due to this activity.

a. As the Emails and the SMSs are sent to the relevant segment only hence the cost of the campaign will be drastically low.

b. The information will be given to those only who are looking for it.

One of the pioneers of using the CRM is Volkswagen. As soon as the internet was introduced the company observed that the customers wanted to connect directly with the company and not through the dealers. They were asking about the financing options available, service matters, vehicle information and also voiced their concerns. This is when Volkswagen realised the importance of the CRM systems. This is when they brought the mySAP CRM for Audi and Volkswagen. However they were cautious with the use of CRM and implemented this for the VIP customers and the luxury car segments only. The initial objective with which they introduced mySAP CRM was to keep an integrated, consistent, holistic view of these VIP customers and this segment so that they can handle their queries as well as complains without any time delay. It is also important to know that it takes 5 times more money and time to attract a new customer than to retain the old one. Hence they were very much focused on their old customers. The whole aim was to calculate the lifetime value of the customers, prepare new loyalty program as per the value of the customers or pitch in for the new products as per the buying pattern of the customers. This CRM also helped Volkswagen to identify the family link between the customers and hence tailoring gifts from one customer to his family member and giving special discounts on such offerings.

Later on Volkswagen introduced this system for other segments as well. They are using it for lead capturing and providing the relevant information to the dealers so that the dealer can successfully convert the lead into customer. The lead is tracked with the help of the CRM and a proper follow up is done by Volkswagen till the purchase is made or the lead declines. Also now they have implemented CRM to handle the customer complaints very effectively. It has also helped the customer representatives to manage the complaint calls better and handle the system customer feedback in a better way. They have a call back system and you get a call within 10 minutes of registration for the test drive. All this has been made possible with the help of the CRM system.

Now the social media has also become a very important medium of conversation for the companies along with the customer. CRM has a solution for this as well. If the name of the company is used then companies will get to know this with its help. The key lies in contacting the same customer multiple times but through multiple mediums and CRM provides the best way to do this. Thus CRM is the way ahead.

This article has been authored by Tarun Sharma from IIM Kashipur


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