Marketing Financial Products

Product Management and Customer Relationship Management - Chapter 3

When there are multiple tiers, the brands in all the tiers should convey the same organizational values. These values can be communicated through brand logos and taglines. CRM is a strategic tool for marketers to acquire customers, retain them, and maintain long-term profitable relationships with them. It uses information technology to achieve these objectives. Competitive pressures have led marketers to realize the necessity of customer retention to survive in a deregulated economy. CRM has enabled the shift in approach from being product-centric to being customer-centric. In addition to maximizing customer value, CRM helps marketers to cross-sell products, achieve long-term profitability, and build the brand.

Relationship marketing is concerned with relationships that exist between any two stakeholders of a business. It involves relationship building with both external customers and internal customers. In an organization, relationship marketing can be at one of the following five levels -- basic, reactive, accountability, proactive, and partnership levels. One-to-one marketing essentially involves knowing about each and every possible need of the targeted customers and developing tailor-made solutions for them. To implement one-to-one marketing, the marketer needs to identify the target customers, differentiate them into groups, interact with each customer group, and provide customized products and solutions in a cost-effective manner. This can be done using the technique of mass customization.

Customer knowledge, customer loyalty, and customer switching are three important concepts in CRM. The components of customer knowledge can be classified into three broad categories: knowledge about the customer, knowledge to support the customer, and knowledge from the customer. Customer loyalty can be either affirmative loyalty or reluctant loyalty. The level of affirmative loyalty is influenced not only by traditional factors, such as customers, product offerings, employees, and measurement systems, but also on emerging practices such as electronic customer care. Eight different reasons have been identified for customer switching. They include (a) core service failures, (b) service encounter failures, (c) price failures, (d) inconvenience, (e) employee response to service failures, (f) attraction by competitors, (g) ethical problems, and (h) involuntary switching. The first five reasons in this list can be addressed through the use of CRM techniques.

Implementation of CRM includes customer knowledge management, technology adoption and implementation, and performance measurement. The customer knowledge management process (journey) is a cycle with four inter-related steps - developing a customer-focused strategy; developing the customer buying process; implementing actions, tactics, campaigns; and customer learning. Technology implementation has become the key to CRM implementation in an organization as huge volumes of customer data can be stored, managed, and retrieved using the latest technologies. CRM software tools can be categorized into operational CRM tools and analytical CRM tools.

When the performance measurement of the CRM activities is done using a carefully defined basket of metrics, it helps in managing and controlling the CRM initiatives in the organization. In the future, large enterprises in India are expected to opt for CRM applications which have pre-built interfaces with standard ERP applications, while the small and medium business enterprises may still continue to use stand-alone CRM applications. The usage of CRM in India is expected to evolve from ensuring operational efficiency (in customer handling) to yielding strategic benefits -- through real-time customer segmentation, and co-creation of products with customers.

Chapter 3 : Overview