7) Customer Relationship Management and its Strategic Application

ISSN: 2320-8236
VOLUME: 2, ISSUE:3
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Customer Relationship Management
and its Strategic Application in Different Businesses
Andrea Almeida D’Costa
Research Scholar,
VIT Business School,
Chennai
. Faye Xavier Colaco
Assistant Professor,
Sri Sri Institute of Management Studies,
Goa
Abstract:
Customer Relationship Management or CRM as it is widely called is basically a model which helps the company to manage its present
and future customers. Due to constant innovations in the marketplace and with the changes in the economy, there has been a shift from
the seller’s market to that of a buyer’s. Marketers are constantly trying to gain new customers, however at the same time aiming to
retain existing customers. As per research it is found that it costs six times more to gain a new customer as opposed to retaining a
customer [a]. CRM helps the company develop and maintain relationships with existing and new customers with key important links to
technology, people and processes. It is important that an organization is able to meet the expectations of its customers and thereby
satisfy their needs, this would help generate positive customer lifetime value for the firm. This paper throws light on the strategic
application of customer relationship management in different businesses such as the banking sector, healthcare sector, education sector
and the entertainment sector. It will also dwell on how to manage and deliver customer relationship management and the obstacles in
implement it.
Key Words: customer relationship management, customers, banking, education, entertainment, healthcare
INTRODUCTION
Of late there have been a lot of changes in the market place. Though the concepts of marketing remain the same as before, the approach
that marketers are now taking to gain new customers and retain existing customers have changed significantly over the years. With
advances in technology, the manner in which different sectors conduct business is constantly evolving, thereby providing greater
convenience to the customer who is constantly on the move. It is in this context that CRM, i.e customer relationship management has
opened various avenues for marketers to pursue.
Paravatiyar and Sheth (2001) defined CRM as a “comprehensive strategy and process of acquiring, retaining and partnering with
selective customers to create superior value for the company and the customer” [b]. Whereas, Mukerjee and Singh (2009) considered
CRM as an important tool which helped marketers in improving their revenues by focussing on customer retention, experience and
repurchase [c]. For companies that lay emphasis on CRM, they view it as a tool which helps them create and deliver value to their
customers, which in turn improves the brand image and results in lifetime association with their customers. In fact this value which is
passed on to the customer is thus of mutual significance to the companies too.
A CRM Plan
It is observed that companies base their CRM capability plans on four important cornerstones, mainly technology, people, process and
knowledge. Technology refers to the technology that supports the entire CRM system. People refer to the skill sets, capabilities and
attitudes of the people who manage the CRM system on a day to day basis. Process mainly pertains with the processes which
companies use so as to gain access and interact with their customer base which will help them in gaining insightful data that can be
used to create value to both, the customers and the company. Finally, knowledge refers to the approach and methods which companies
use to add value to the vast customer data so as to acquire the knowledge and insights to build better long term relationships with their
customers.
In general, irrespective of the industry in which customer relationship management is used, it is mainly directed to meet the following
purposes [d]:
Identify new customers: Irrespective of the business sector a company functions in, it is essential for marketers to have a pipeline of
new customers. It is thus essential that the marketer is able to identify new customers and come out with innovative offers which stand
out from those that the competitors offer. Transactional data which the company may have regarding customers need to be compiled
into a database so that proper analysis can be done.
Segmentation of customers: It is important that marketers make use of the available data to segment the customers before customizing
offers to target them. Marketers need to make use of data mining tools to effectively use the vast amount of customer data available to
them. By proper use of tools they can effectively arrive to list of customers who are more likely to respond positively to a particular
offer.
Customer analysis: Data mining tools also help marketers to understand customers past behaviour thus effectively predicting and
forecasting future behaviour. Besides gaining new customers, marketers are also on the lookout to satisfy their existing customers thus
developing a loyal customer base. It is important for the marketer to understand each action of the customer.
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Customer lifetime value: Since we are living in an era of relationship marketing as opposed to transactional marketing in the
past, it is necessary to understand the concept of customer life time value. Customer life time value is the estimated profitability
of a customer over their entire relationship with a business. Thus if the marketer is able to develop a relationship with the
customer and is able to meet and exceed his or her expectations, that customer will probably be loyal to that brand for his entire
life. In the meantime the customer would probably also be a brand ambassador for the brand at the grass root level by sharing
positive word of mouth.
Cross selling and up selling: With the help of data mining tools, marketers are exposed to a range of information about its
customers. They can understand the behaviour of customers in a way which will help them offer related products to other
customers who behaviour in similar ways. For example, if customer A has bought products X, Y, Z; then probably customer B
who has bought product X would also be interested in purchasing products Y and Z. Thus marketers can find a range of
associations between products, services and behaviour of customers which can help them cross sell and up sell products to them.
E-CRM also includes on line process applications such as segmentation and personalization. The use of internet, intranet, and
extranet made customer services, as well services to partners through Internet technologies, data generated about customers can
easily be fed into marketing, sales and customer service data base for analysis. E-CRM involves for more than automating
processes in sales, marketing and service and then increasing the efficiency of these processes. IT involves conducting
interactions with customers on a more informed basis and individually tailoring them to customers needs.
Use of CRM Strategy in the Banking Sector
Due to the vast array of banks in this highly competitive marketplace, all of which offer similar products and services to
customers, it is becoming more difficult for banks to differentiate themselves from their competitors. Many a times it is the
service provided by these banks that becomes the key differential point. Thus with the emphasis on the customer, this has led to
development of CRM in this sector. [e]
The use of CRM in this sector has provided banks with efficient data collection, information about each client, which can further
help in decision making and designing new products. It is important that the managers know what kind of customer information
they are looking for and what do they plan to do with this information. Thus they can customize their product offerings and
communication to suit different segments of customers. Thus CRM also leads to increase in revenue by providing customized
products and services to customers. CRM also helps improve customer satisfaction. However care needs to be taken for
successful implementation of CRM. Once successfully implemented and integrated into the system, CRM brings many benefits
to banks, such as easy collection and storage of customer information, acquisition of new customers, retention of existing
customers, analyzing profitability, relationship management, assisting in marketing communication efforts, increase in cross
selling and up selling etc. Many Indian banks have been using Operational CRM which helps in providing customer support via
email or the phone. The call centre linked to the bank with the help of the Operational CRM is immediately updated about the
information needed by the customer, which is then passed on to the respective customer. On the other hand, analytical CRM
with the help of data mining and warehousing tools is able to analyze the information by understanding the type of account and
transaction. Thus with the use of the CRM tool, banks are able to provide improved and consistent service to customers, it helps
them increase their revenues by designing new products and increases their profitability through low costs of product
development and services [f].
Use of CRM Strategy in the Health Care Sector
Today, patients have a vast array of choices in making decisions as to which provider to go to when it comes to healthcare.
Customer service is most essential in this sector and we see that only those providers which are able to sustain and increase this
quality are able to survive in this competitive business [g].When it comes to healthcare, it is important to build and develop that
trust between the patient and the hospital. Thus the strategies used by hospitals need to focus on developing this trust through
customer engagement.
CRM plays a very important role in the healthcare industry. It helps hospitals to understand and know more about patient
behaviour and their demands which helps in building strong relationships with them. CRM leads to higher patient satisfaction
and helps them in managing their health conditions. It also helps to reduce the time spent on servicing each patient and it also
helps hospitals to act rapidly and effectively to patient inquiries. Some of the features of certain well known CRM packages for
healthcare include de following [h]:
Patient database which helps to gain and retain all the client-, patient- and employee-oriented information and keep it in common
access for more essential and well-coordinated client approach.
Contact appointment planner which fixates the time and place of various medical procedures for all the patients and assists to
plan further examinations and tests.
Tariff management system which allows operating and modulating the cost of medical services.
Billing system which helps to manage the expenses and presents the patients with the bills.
Back office project accounting system which is a special feature which allows the handling of documents and which generates a
list of existing patients. It also helps in checking the amount of care given to each patient and the effectiveness of other
marketing programs which have been designed to improve the patient experience at the hospital
Customer Relationship Management and its Strategic Application in Different Businesses
Andrea Almeida D’Costa, . Faye Xavier Colaco
© INTERNATIONAL RESEARCH COMMUNION
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ISSN: 2320-8236
VOLUME: 2, ISSUE:3
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Proactive managed care programs which help to schedule the different healthcare facilities at the hospital to the patients
allocated to them based on the procedures they are undergoing.
Besides all the above mentioned features, CRM systems also help in the management of hospitals and patients dealing with
complaints. It also helps in educating patients about their health status and how to cope with their illnesses. Thus CRM systems
are seen as an effective tool for predicting future needs of patients.
Use of CRM Strategy in the Entertainment Sector
This section of the paper more specifically deals with the use of CRM in casinos. Right from the start, casinos have understood
the importance of detailed customer information and have used this information in managing customer relationships. At any
given time, casinos would have information pertaining to player statistics, average bet etc. Harrah’s uses it CRM data warehouse
to track guests visiting any of its casinos, restaurants, hotels, or entertainment locations. This helps the company understand their
customers behaviour and choices which helps them predict their future behaviour and visits, manage promotions and
personalized offers and drive marketing campaigns that have effectively generated over 20 percent growth in profitability since
implementing the CRM strategy [i]
CRM in a casino basically helps in achieving the following objectives [j]:
Customization of service provided: Employees of casinos go out of their way to make sure that every piece of customization is
perfected and this can go a long way in developing long term relationships with their loyal customers. This may be something as
simple as the type of flowers or favourite brand of liquor that an A segment client prefers
Coding of customers: Casinos often segment and code their customers based on their spending and how profitable they are. Thus
based on the segment segregation of its clients, the services and product offerings to them would vary based on the segment they
belong to
Routing customers: This is linked to coding of customers, that is customers belonging to a particular segment would be given
preference and priority in terms of services provided to them, thus it is important for all the possible employee touch points to be
aware of this sensitive information
Targeting customers: Certain promotions are offered to certain customers based on their worth to the casino. Thus based on the
information obtained from the the customer relationship management software, the marketing efforts can be tailored specifically
for each player. Targeting various customers with the right promotional offers is a critical function of CRM
Sharing customer information: This vital information that the CRM system pulls out regarding each client is not only valuable
and of importance to the casino but to every other department that is in touch with the customer. It could be the restaurant or
other entertainment locations or other casino branches linked to the parent brand. Sharing this simple and vital information
across could give the company a chance to delight its customer by making him/her feel more valuable. This information could
also help in cross selling between different related businesses.
Improving cost management: An effective CRM system can mine and sort data according to who will use the promotions. CRM
also would increase loyalty to the customers that actually used the promotions on a regular basis.
Besides, loyalty cards are the key in casinos [k]. When a players swipes his/her card at a machine or game, a series of interlinked
databases come into picture. A vast array of information regarding the customer is captured on a real time basis, such as how
long he/she plays, how much he/she wins and losses etc. This information is compared with past visit statistics and the
employees are provided with information about how to treat a given customer, based on how much he/she is worth to the
company. Thus casinos have greater experience of mining complex data on customers on a large scale and they have been doing
so successfully for a longer period of time that other industries.
Use of CRM Strategy in the Education Sector
The manner in which education institutions approach business has undergone fundamental changes as compared to the days of
yore. They now operate and interact with their so called customers – students, alumni, faculty members. The focus is shifting
from focus on improving internal operations to focusing on the customer. As a result many institutions are refocusing on
technology, especially customer relationship management, to help them focus on their customers. CRM provides flexible and
affordable solutions at high level of efficiency and this helps institutions to take informed decisions which would benefit their
customers.
Consider one of the goals of an institution is to increase its intake of students from neighbouring states. Thus making use of
customer relationship management, the institution would target specific groups, who would be more likely to respond to such
campaigns. Thus a personalized campaign would be launched via email, post and mobile. Prospects would be given a unique
user code to access the institutions’ personalized webpage. This information is customized based on the interest of the prospect
so as to catch his/her attention. Besides there would be the standard links providing information regarding admissions. The
institution monitors the prospects responses and initiates appropriate follow up communication. Besides, prospects who have not
responded would be sent follow up emails. All this is made possible by making use of the customer relationship management
software. This is one such example of trying to convert a prospect into a student. Similarly CRM can be used across different
stages right from prospect, candidate, applicant, student, alumni. CRM centralizes information pertaining to the student records
Customer Relationship Management and its Strategic Application in Different Businesses
Andrea Almeida D’Costa, . Faye Xavier Colaco
© INTERNATIONAL RESEARCH COMMUNION
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ISSN: 2320-8236
VOLUME: 2, ISSUE:3
JULY- SEPTEMBER 2014
www.ircjournals.org
such as attendance history, grades and other important information in order to provide a complete overview of each student.
Therefore review of the student data and review of the teachers' performance can be used to respond to certain issues [l].
In order to differentiate themselves from the herd, education institutions, need to build up a significant relationship with current
students and potential prospects. Thus internal systems need to be integrated by use of CRM so as to centralize databases and
resources.
Obstacles in Implementing CRM
Many a times CRM systems fail due to certain obstacles in its implementation. Some of them are as listed below: [m]
Lack of skills and inadequate research
Poor quality and quantity of data
Inability to appreciate the long term benefits which the company can obtain
Functional limitations
Lack of involvement of senior management
Inadequate assessment systems
Conclusion
We see that in today’s marketplace of intense competition, firms which have greater understanding and knowledge of their
customers have an edge over their competitors. Having this knowledge they are able to respond to their customers needs and are
able to predict their future needs. And hence the need for successfully implementing customer relationship management across
business sectors is of utmost importance. CRM enables organizations to obtain essential information about customers and use it
as efficiently as possible. It is important that businesses are able to attract new customers and simultaneously retain existing
customers, and this is only possible by monitoring their customer’s behavior, building their trust and fulfilling their expectations.
At the same time doing the above mentioned as staggering high costs would be detrimental to the company’s profitability and
bottom line. Hence there is a need to reduce costs as low as possible and simultaneously increase efficiency. More and more
companies are not investing in customer relationship management which helps them to maintain relationship with their
customers and in the long run this leads to increase in revenue. Organizations are on the constant lookout to gather relevant
information from every interaction with their customers. They make use of loyalty programs, service agreements, contests,
surveys, call centers and cookies for information regarding their customer. Thus as discussed above, this paper throws light on
the strategic application of customer relationship management in different businesses.
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Customer Relationship Management and its Strategic Application in Different Businesses
Andrea Almeida D’Costa, . Faye Xavier Colaco
© INTERNATIONAL RESEARCH COMMUNION
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