Wednesday, August 16, 2006

Customer Relationship Marketing in action

In my last post we saw what CRM is. We know CRM starts with compiling a database. Now the question is how does it work?

In a purists sense CRM is something done for customers, but it actually starts right from the prospecting stage. Many companies effectively start using a CRM program right from the lead generation stage.

First let us see the various stages in the lifecycle of a customer with a brand.

(I have been experiencing some problems uploading the JEPG file I have created illustrating the customer ownership cycle and hence it can't find a place here... those who want to get a copy of this can reach me at "raja dot baradwaj at gmail dot com" else the following is the best I can illustrate, please bear with me...)

Market--> Suspect--> Prospect--> Customer (A bonded customer if he gets too close)-->

Churned Customer (If a Customer doesn't come back or he has Churned out of the system)-->

The Churned customer goes back to the market to become a Suspect again (And this cycle continues)

Lead generation

1. Identifying suspects
2. Segregation of prospects
3. Addressing the prospects / calling for action


1. Welcoming the customer into our fold
2. Making the customer familiar with our systems and processes


1. Enhancing the product / buying experience
2. Redressal of problems
3. Sustained, relevant communication throughout the buying cycle
4. Rewarding loyalty and repurchase

Win back

1. Getting back those irate / dissatisfied customers into the fold

A CRM program would broadly encompass the four stages of the customer lifecylce. The program focuses on being in touch with the customers frequently and making sure they have a very happy brand experience.

The contact the brand has with its customers is called “Touchpoint”. In any customers lifetime with a brand he is bombarded with various touchpoints. The more (interesting) the touchpoints the better brand experience & feedback the customers would have.

Let us see an example of CRM with an automobile manufacturer

Who does he sell to?

1. Individuals like you and me
2. Companies who own a large fleet of cars

Lead generation in this category is usually facilitated by various media including the mass media like newspapers, TV, Radio, Outdoor and also focused media like web, road shows, direct mail. But whatever the media used, there is a definite call to action – asking people to walk in to a showroom or call a number for more details.

Once you see this communication, if you are interested
1. You call the showroom to know more details
2. Walk-in to the showroom asking for more details
3. Search the website for more details
4. Ask for a test drive

Whatever your mode of communication is, your data is captured and the lead is passed on to the relevant sales team for following-up with you.

The sales team takes over and tries selling you the car of your preference.

Assuming you have decided to buy the car. And you have bought, now what happens.

You go to the showroom to take delivery of the car. The dealership makes the process of registration, insurance etc. simpler by helping / guiding you do it.

They fill enough petrol in your car to ensure you are safe for at least the next couple of hours.

Some dealerships give you a small gift, some have you photographed receiving the car and they even frame it nicely before they hand it over.

A guy from the dealership then has a small chat with you, explaining what is what in your new car as you sit in it to drive out of the showroom.

After a day of owning your car you get a call from the dealership asking you about your experience with your car.

Three days from then you receive a welcome pack from the distributor. This also has the details of your contacts in the showroom & service center you might need in the future.

Two days from then you receive another call (only a few receive this). This time it is a survey checking how your buying experience has been.

From now on it is a set calendar that is followed…

a. Service reminders
b. Offers on accessories
c. A newsletter / magazined. Service offers
e. Birthday cards / greeting cards
f. Registration / insurance renewal reminders
g. Service feedback calls
h. Special offers
i. Referral programs
And many more

This continues for about three years, then comes the next phase. This is when one might start thinking about buying a new car (in the Middle East market people as seen to change their cars once in 4 years).

So by the third year you would be informed about the new model launches, buyback schemes, offers on price etc.

While the other communication would also continue, the focus would be on retaining you by selling you another car.

By the fourth year the dealers effort of selling you another car intensifies, I have noticed that more often than not people remain loyal to their car brands. And this is provided they didn’t have a really bad experience with their car or the dealership.

For those people who don’t buy again, they call you to find what you have bought and then keep in touch with you at regular intervals to see if you could come back to the brand again.

To conclude

How happy a customer is with a brand depends on the kind of bond the brand has forged with its customer(s).

This bond determines how loyal the customer would be to the brand and also enhances his experience with the brand.

More on bonds & loyalty later.

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