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CRM: A Loyal Customer Means Money

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DQI Bureau
New Update

The CRM market is expected to grow significantly in the next three years, up by a whopping 156%That customer is king is finally finding favor in sales-centric corporate

India. Admittedly, companies have been focussed towards addressing customer

needs for some time, but the concept of creating customer loyalty has never

figured high on any boardroom agenda. All that is changing now, with a ‘sale’

changing in relevance–from being the end of the chain, a successful sale is

now emerging as only the beginning of a larger picture, that of retaining the

customer for a future sale, or for his resultant brand loyalty leading to a

fresh one.

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Till recently, customer service was never high on any corporate priority

list. But in the face of increasing competition and access to all veins of

resources, there is a compulsion to keep up with global standards. With product

features largely the same, customer relationship management is the key

differentiator and driver for your business.

"Large FMCG companies that have been catering to the masses for a long

time are now showing interest in interacting directly with the consumer to

understand his needs better. Till now, their only link with the customer was

through the channel partners," says Sumeet Kapur, CEO, Global Groupware

Solutions.

The rising awareness and acceptance for CRM solutions are clearly visible,

especially among the larger companies. In a survey conducted by IDC, while 72%

of large corporations showed interest, 30% of SMEs also appeared keen on

adoption of the CRM model. The overall market is expected to grow from Rs 634

million this year to about Rs 1.627 billion by 2003-04. As IDC assistant manager

Vibhas Amawate says, "Earlier, we had a seller-driven market where

companies could decide what they wanted to sell and who to. Today, however, the

consumer becoming more aware and having so many options on hand, has started

asserting his needs and these cannot be ignored. To do that would mean losing

him to a competitor." Tapping in on customer loyalty, therefore, is

becoming critical for brand building.

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The Big Bang approach

Whether it is to economize or a lack of long-term vision, most large companies use CRM only for automating pre-sales activities and sales managementOnce a company decides to adopt a CRM solution, the next obvious question is

how to implement. Should it go for a Big Bang approach and adopt all modules at

once or should it select only the ones that are most crucial? Depending on the

number of modules you select and the vendor you buy them from, the cost of a

solution can range in cost between Rs 25,000 and Rs 30 lakh. Whether to

economize on investment or sheer management myopia, it turns out that most of

the large companies (over 60% of them, according to IDC) show a preference for

automating pre-sales activities and sales management. In fact, CRM is seen by

some as only a ‘sales automation package’.

Experts, however, warn that this piecemeal approach could be detrimental to

the image of the company. "CRM is about a customer’s life cycle

management and should be adopted in totality," says Kapur. "If you

really want to create a loyal customer, it is important to ensure that you are

delivering the same quality of service across all functional areas, whether it

is sales or customer care and across all branches, be it Bangalore or Mumbai."

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However, if you don’t have enough resources to go all out in one go, not to

fret…you could implement in a phased manner, depending on the requirements of

your business. For instance, a car manufacturer cannot expect his existing

customer to continue buying cars from him repeatedly, for the cycle would

stretch into years. Here, acquisition becomes more important than retention. But

if you have a large range of products, it becomes important to retain and tap

your existing customer base.

Creating loyalty

CRM vendors can be broadly divided into three categories, those catering to MNCs, SMEs and ERMs. Depending on the number of modules you select and the vendor you buy from, the cost of a solution can range between Rs 25,000 and Rs 30 lakhA CRM solution can be used to deliver personalized marketing and sales of

products and services to the customer. By being proactive in anticipating his

needs, a company can create a loyal base of customers. Retention, which proves

more cost effective than acquisition, can be particularly useful for a

service-oriented organization, especially in sectors like banking. Indian banks

such as ICICI and HDFC are deploying CRM solutions to compete with MNC banks.

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"More and more companies are now realizing the significance of tapping

the right customer and cater to his needs through personalized services. Look at

companies like Dell that are totally customer driven. Now the whole world is

moving towards direct marketing," says Ajay Mian, CEO, All e Technologies.

A call center, which is seen as the primary driver of the CRM market, allows

companies to integrate their sales and customer services efforts into one cycle.

The availability of low-cost English speaking manpower in India has led to the

growth of call centers throughout the country, that cater to both domestic and

international customers.

Increasing level of Internet usage is expected to drive the use of e-CRM

among Indian companies. Kapur points out, "e-CRM is useful only if 90% of

your customer interaction is on the web. With more and more companies moving to

the click-and-brick model, even e-CRM will have to be supported by a strong

offline presence."

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Whatever be your point of contact, phone, web, office or retail outlet, the

bottomline is that every effort for contact management should strike a balance

between customer needs and company’s goals.

Adapt and adopt

In the SME segment, the services industry, which includes finance, telecom, call-centers, IT and hospitality, is keenest to adopt CRMAny CRM process is mainly built around three areas: Interactive management,

business processes and knowledge management. While most developed countries have

reached the third stage and are now increasing the level of personalization in

their customer services, Indian companies need to first get their basic

interaction and processes in place first. "The developed countries already

have their business processes in place so they can easily go for knowledge

management. But Indian companies have had a very uneven growth, they shouldn’t

attempt KM even before they get the basic processes right," explains Kapur.

"If you are not able to solve your customer’s product-related problems,

there is no way you can please him by remembering his birthday or

anniversary," he adds with a smile.

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Why do CRM initiatives fail?

According to the Gartner Group: "CRM is a customer-focused business

strategy designed to optimize profitability, revenue and customer

satisfaction." The reason why most CRM initiatives also fail to yield

desired results is because it is difficult to quantify the benefits. Simply put,

customer satisfaction is not measurable.

The mistake most enterprises make to delegate CRM implementation to the IT

department. "The most successful projects are those supported by the chief

financial officer who can see clearly that such a project will have a positive

impact on shareholder value,"says Amawate.

Although companies have been trying to devise RoI-based models, none of the

current CRM packages can directly link customer relationship with revenues. Even

after making a customer happy, retaining may not be that easy. Moreover, an

enterprise also needs to devise tactics to generate business from him. So, the

onus is really your ability to take control over the battlefield. For all you

know, winning a customer’s heart might just be easier than making your wife

happy!

Shweta Verma in New Delhi

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