CRM

Outline a comprehensive Customer Relationship Management system, referring to the main modules and how marketers may use information from them.

CRM has originated from Relationship marketing. Marketers wanted to change focus from one time relation to long term value relationship. It enables a company to provide customer service in real time by focusing on relationship development with each individual customer through the effective use of individual account information. A better understanding of customer behaviour patterns can enhance the long term profitability of the lifetime value of a customer’s relationship with the company because it will lead to more sales, better service and higher customer retention rates. Shift from product-focus to customer-focus.

Customer relationship management consists of four steps:
Identify your customers
Differentiate them in terms of both their needs and their value to company
Interact with them in ways that improve cost efficiency and effectiveness of your transaction.
Customize some aspect of the products or services you offer that customer.

As competition increases marketers are realizing the importance of building and maintaining long-term customer relationships to sustain and grow their businesses. In many places customers are not just valued by each individual transaction but by their lifetime value to the firm. Studies have show that a customer retained for life is more cost effective, requires less service provides more business and contributes to new customer acquisition by offering positive referrals.
One recent study (Kalakota, Ravi(1999),et al) shows following
It costs six times more to sell a new customer than to sell to an existing one.
A dissatisfied customer will tell eight to ten ppl abt bad experience
A company can boost its profits by 85% when it increases its annual customer retention by 5%.
Odds of selling to a new customer are 15%, where as odds of selling a product to an exisiting customer are 5%
Implementing CRM
Most companies revolve around products and services, hence it means realigning around the customer – which can be a radical change in the company’s culture. Since all companies cannot afford to automate all CRM functions at once, they are advised to begin by examining carefully all their business processes and determining which need to be automated first and what technical features are required.
Success of CRM depends upon complete, clean, consistent, current and accurate data from all customer touchpoints across the company. Company must apply strict rules to incoming customer information.
CRM data are entered into database in data warehouses and mined using specialized software to transform data into meaningful information.
CRM system is not independent of the people who operate it. They must be trained properly. This includes demonstrating how to gather information correctly and use CRM information and so on.
There is no “one size fits all” software package. A company has to build its own CRM strategy or customize an off the shelf solution.

























Several large Australian companies (for example Westpac and Commonwealth Bank) have recently announced acquisition and implementation of large new Customer Relationship Management (CRM) systems valued at over $A100 million. However, there is considerable debate as to successful implementation or otherwise of large-scale CRM systems. Some corporations have written off large sums of CRM related software development, while others are claiming early benefits for customers from new CRM system implementation.

Discuss this issue with reference to your understanding of both philosophies and systems related to CRM from a marketing perspective.

Profitability is now geared towards getting more from each customer, more of their banking activity and more of their investment and retirement-savings action.

After a decade of watching customers spread their loans and accounts around in search of a more competitive deal as the non-banks chipped away at their business, the banks have a mountain to climb to win them back.

Despite their lack of success in wealth management forays so far, the banks are still chasing the big prize -- converting their millions of basic banking customers into lucrative investor clients with their superannuation and funds-management arms.

In doing so, they are embracing ``relationship banking'' that may sound like an cliché to many with unpleasant memories of dealing with their banking provider in recent years.

While those with small incomes and savings are largely forgotten, ``valued'' customers -- those with a growing asset base or above-average income -- are being promised something for which they have been crying out for years; lower fees and personal service.

Use a range of banking and investing services at the one institution, and the big and small institutions are promising a cheaper deal and attentive service in the hope of winning your confidence and ever more valuable business as you get older and wealthier.

What used to be special terms offered in ``professional packages'' to accountants and doctors has widened considerably,

The lower fees, along with other discounts and bonuses, are here for many already, but you're going to have to wait a while for the service.

Customers might also be taken aback at some big brother-style developments. As IT systems are improved and ``data mining'' of our usage profiles continues, there'll be some unexpected phone calls from the local branch as banks try to pre-empt our financial decisions.

The head of relationship-managed customers at Westpac, Mike Chesworth, says the bank now uses customer relationship management (CRM) technology in this way but maintains it is not just a trigger to sell another product.

``If a customer makes a large deposit or takes a large chunk out of a home loan, we're able to say to our staff in the branch `talk to the customer about their objective in doing that','' Chesworth says. ``To be able to offer a total financial solution, including convenience of advice and point of contact, is a definite competitive advantage.''

Playing to their strengths in size and product range, NAB, the Commonwealth, Westpac and ANZ are all pushing their ``relationship packages'' hard, as are the regional banks and some non-bank institutions (see accompanying story).

And the thresholds for qualification for these packages do not limit them to the super rich.

Although the more you have the better, borrowing $150,000 for a home is enough to get you into the ballpark. With $250,000 in borrowing, savings and investments the options are even better.

The banks are guarded with their figures but it appears that more than half of all new mortgage borrowers are qualifying for a benefits package.

ANZ's head of distribution marketing, Stephen Spiller, says its Breakfree package is aimed at a fair chunk of the mass market and particularly the ``mass affluent'' market.

The old marketing adages have been rediscovered. It's cheaper to retain customers than obtain new ones and cheaper to sell a new product to an existing customer.

Roy Morgan Research says the major banks' ``share of wallet'', or their holding of customers' total financial business, averages 43 per cent. This share includes banking, managed funds and investment borrowing and is up less than 1 percentage point in six years.

With customer bases in the millions, the potential for increased profitability -- if they can lift this share to 50 or 60 per cent or more -- is huge, analysts say.

The banks have been trying, but now there is the realisation that it will only work if that ``relationship'' is good.

Major bank customer satisfaction levels have consistently lagged those of smaller financial institutions, Morgan surveys show.

The proportion of customers of the Big Four that are satisfied or very satisfied was 59 per cent in May this year, up slightly in recent times but still down from 68 per cent in 1997.

This compares to 83 per cent satisfaction among credit unions and building societies and 73.5 per cent for second-tier regional banks.

Westpac's Ask Once program to overhaul service levels on common customer problems.

ANZ's ``Best deal with a human face'' strategy and CBA's Retail Banking Strategy outlined in May are also manifestos for transforming service, even to the extent of opening new branches and offering ongoing personal contact with one employee. Whether this is ultimately achievable or not is in debate, and few inside or outside banking would argue there isn't a long way to go.

There remains a big gap between rhetoric and reality as the banks struggle to overhaul the old culture and disjointed IT systems of their monolithic organisations.

ANZ provides a good case in point in the challenges banks face with their new strategy.

Its move to offer very competitive Access transaction accounts limiting transaction fees to $5 a month is an attempt to lift customer numbers -- its 4 million customer base is the smallest of the Big Four and well behind the Commonwealth Bank's 10 million.

The idea to then cross-sell new customers on to other products via its now defunct Premier Select discount package ran into familiar trouble.

Widespread complaints about discounts not being passed on and fees incorrectly charged did more damage than good.

Assuming they can get the simple things right, financial institutions have to realise that true relationship banking has to be more than just securing a customer and up-selling to other products.

A ``relationship'' is giving advice not just in the first instance but right throughout the relationship with that organisation,''