1. CUSTOMER RELATIONSHIP
MANAGEMENT
(CUSTOMER LIFETIME VALUE,
CUSTOMER RELATIONSHIP STYLE )

2. • Customer is the greatest asset to any business,
specifically, the current customers who will
remain as customer in future also. Its common
knowledge that the customer is the basic reason
for the company's existence. The importance of
customer is known to everyone in business, but
what's surprising is the fact that many business
do not know the value of the customer in terms
of Rupees

3. • CRM is nothing short of a strategy which places
CUSTOMERS in a pivotal position for the organization. It
changes the focus of the organization to better exploit its
key relationship with customers, to significant advantage
for BOTH parties.
• However, embracing Customer Relationship
Management is often easier said than done. Of course it
requires commitment, but also needs an understanding
and knowledge of the concepts and successful and
proven practices. Equally, a framework of tools can
prove to be invaluable in terms of ensuring accuracy and
saving time/resources.

4. CRM PROCESS
• Step 1: Clearly Identify Your Target Market &
Value Proposition
• Step 2: Define Your Overall CRM Strategy and
Consider Costs
• Step 3: Define How Each Customer Type Will
Be Handled
• Step 4: Select a CRM Software to Measure
Performance
• Step 5: Continue to Re-engage Customers

5. CRM Software
From small enterprises to multinational corporations, any
business that maintains regular interaction with
customers benefit from a well organized CRM system.
CRM includes all business processes in sales, marketing,
and service that touch the customer. With CRM software
tools, an enterprise might build a database about its
customers that describes relationships in sufficient detail
so that management, salespeople, people providing
service and even the customer can access information,
match customer needs with product plans and offerings,
remind customers of service requirements, check
payment histories and so on.

6. How Salespeople Use Customer
Information
• To improve customer strategies
• To grow, retain, or win customers
• To maximize customer lifetime value (CLV)
• Data about the customer is the fuel to the CLV
engine

7. Customer Lifetime Value(CLV)
• Customer Lifetime Value (CLV) a marketing metric that projects the
value of a customer over the entire history of that customer's
relationship with a company. It is the current value of the likely future
income flow generated by an individual purchaser.
• . It seeks to maximize profit by analyzing customer behavior and
business cycles to identify and target customers with the greatest
potential net value over time.
A Profitable customer is one that overtime yields a revenue system
that exceeds by an acceptable amount of the company's cost
stream of attracting, selling and servicing that customer over time.

8. Calculating your Customer Lifetime Value:
• To calculate CLV, you need to know three
things, First, the estimated annual profits from
that customer. Second, the duration of the
business relationship with that customer. Third,
the current discount rate. If you do not have the
actual figures, then you will have to estimate. As
the Customer Lifetime Value will have a
significant impact on your bottom line, my advice
is that you be prudent and conservative in your
estimation.

9. • Let's say you have a customer who generates
Rs3000 profit every year for next 10 years . If
the current discount rate is 8%, then the
customer life time value will be:
CLV = i=10 Si 3000/1.08 i = 20,130.25
CLV = 3000/1.08 + 3000/1.08 2 + 3000/1.08 3 +
3000/1.08 4 + 3000/1.08 2 .... 3000/1.08 10
• This means that the customer is worth Rs
20,130 to you today!!

10. • Importance of understanding Customer Lifetime
Value
"Customer lifetime value is not just a number; it is a way
of thinking and doing business"
• Knowing and fully understanding the customer lifetime
value changes the business perspective to a great
extent. To begin with, company can use it to estimate the
current value of all its customers. By knowing the current
value of the customer, you can then segment customers
into different categories. Segmenting helps to
concentrate more on the profitable customers. For
instance, discount brokerage company Charles Schwab
answers its best customer's phone calls within 15
seconds while other customers have to wait for as long
as 10 minutes to have their calls answered. Once
customers are segmented based on profitability, you can
tailor your offerings to various segments.

11. Segmenting Customers
• Today, companies around the world are increasingly
segmenting their customers in order to increase
profitability. Segmenting helps companies to tailor their
offerings to each of the segment. One of the common
ways of segmentation is based on loyalty & profitability
After segmenting customers, companies tailor their
offerings, marketing strategies to convert existing
customers to become more loyal and more profitable.
Segmenting helps companies to allocate their marketing
resources based on the customer value. Customer
lifetime value give a formalised depiction of a long-term
view of the customers and gives a better picture of what
the company is going after.

13. Increasing customer retention.
• Traditionally, most marketing theory an practice centers
on attracting new customers rather than retaining
existing ones. Since acquiring a new customer costs a
lot more than retaining one, it is wise to measure
customer satisfaction regularly. The key to customer
retention is customer satisfaction. A highly satisfied
customer stays loyal longer, buys more products or
services, pays less attention to competing products or
services, is less sensitive to price, offers product or
service ideas to you, and costs less to serve than new
customers.
• To improve customer retention, you need to analyse
customer defection. Analysis can start with the internal
records such as sales log, point of sale receipts records
etc. Next step would be to use market research such as
bench marking studies and statistics.?

14. While analysing customer defection, some basic
questions to ask are:
• What are the retention norms for our industry?
• What is the relationship between retention rates
and changes in prices?
• Where to lost customers go for the same
products or services?
• Is there a cyclical pattern for customer
defection?
• Does defection rate vary by region or sales
representative or distributor?
• Which company in our industry has the highest
retention rate

15. Reduce customer defection
• Reduce rates of customer defection – deliver
personalized service
• Increase longevity of relationships – involve
customers
• Enhance customer growth potential – cross-sell,
up-sell
• Make low profit customers more profitable –
terminate, reduce features, pay more

16. Five reasons why customers defect
1. Some customers are bought
2. Some customers move
3. Some customers are unintentionally pushed
away
4. Some customers are intentionally pushed
away
5. Some customers are attracted to
competitors

17. Increasing customer lifetime value
• By definition, customer lifetime value is the present value
of the future profits. To increase customer lifetime value,
one has to increase the profits generated from that
customer. The most common ways to achieve that is
either to up-sell or to cross-sell to the same customer,
i.e., make your existing customers buy more products
from you and buy it more often.
• It is noted that highly satisfied customers often
recommend it to their friends, relatives and others. This
recommendation results in new customers and referral
sales. The cost of acquiring new customers by referrals
is substantially lower than traditional methods. In the
long run, high customer satisfaction results in lower
customer acquisition costs and higher margins, thus
increasing customer life time value.

18. Advantages of CLV
• management of customer relationship as an asset
• monitoring the impact of management strategies and marketing
investments on the value of customer assets
• determination of the optimal level of investments in marketing and
sales activities
• encourages marketers to focus on the long-term value of customers
instead of investing resources in acquiring "cheap" customers with
low total revenue value
• implementation of sensitivity analysis in order to determinate getting
impact by spending extra money on each customer
• optimal allocation of limited resources for ongoing marketing
activities in order to achieve a maximum return
• a good basis for selecting customers and for decision making
regarding customer specific communication strategies
• measurement of customer loyalty (proportion of purchase,
probability of purchase and repurchase, purchase frequency and
sequence etc.)

19. • In marketing CLV is the present value of the
future cash flows attributed to customer
realtionships
Customer lifetime value has intuitive appeal as a
marketing concept, because in theory it
represents exactly how much each customer is
worth in monetary terms, and therefore exactly
how much a marketing department should be
willing to spend to acquire each customer. In
reality, it is difficult to make accurate calculations
of customer lifetime value due to the The
specific calculation depends on the nature of the
customer relationship.

20. Customer relationships are often divided into
two categories.
• In contractual or retention situations, customers who do not renew
are considered "lost for good". Magazine subscriptions and car
insurance are examples of customer retention situations.
• The other category is referred to as customer migrations situations.
In customer migration situations, a customer who does not buy (in a
given period or from a given catalog) is still considered a customer
of the firm because she may very well buy at some point in the
future.
• In customer retention situations, the firm knows when the
relationship is over.
• One of the challenges for firms in customer migration situations is
that the firm may not know when the relationship is over (as far as
the customer is concerned).

21. CUSTOMER RELATIONSHIPS
• Reduce rates of customer defection – deliver
personalized service
• Increase longevity of relationships – involve
customers
• Enhance customer growth potential – cross-sell,
up-sell
• Make low profit customers more profitable –
terminate, reduce features, pay more

22. Five reasons why customers defect
1. Some customers are attracted to
competitors
2. Some customers are bought
3. Some customers move
4. Some customers are unintentionally pushed
away
5. Some customers are intentionally pushed
away

23. Customer Relationships Reduce
Customer Defection
1. Know the retention rate – define it
2. Understand causes of defection and ascertain
which can be managed
3. Estimate profit lost when a customer defects
4. What will it take (cost) to reduce defections?
5. Listen to customers

24. One Customer Relationship Style Does Not Fit All
• While price and satisfaction in the product still dominate
the customer's view of the seller, a third of them are
seeking a greater connection. This third is why it is
critical for businesses to refrain from defining their
relationships in a monolithic fashion: Every customer
views business relationships in individual terms.
• Businesses need to realize that they are building
different types of relationships with different sorts of
customers. Each customer may be unique. However, it is
possible to segment customers according to the
relationships their behaviors indicate they desire -- and
then attempt to craft communications and experiences
that mesh with their expressed relationship style.

25. Customers Want Connection
Mitch Lieberman, a noted blogger and vice
president of marketing at Sword Ciboodle, has a
mantra:
"Customers do not want a relationship with your
business. They want the benefits a relationship
can offer to them.“
Did the customer get what he wanted or
needed, and was the process of getting that
frictionless -- and, perhaps, a little enjoyable? If
the answer to both questions is yes, then the
"relationship" is a good one from the customer's
perspective.

26. Three D’s of CRM
McKenzie's helps managers put together
integrated strategies that embrace customer
relationships while helping them become
relationship-based enterprises.
• Discovery
• Dialogue
• Discipline

27. 12 Principles that Drive Profitable
Customer Relationships
1. Continuously Learn About Your Customers
2. Handle Different Customers Differently
3. Anticipate Customer Needs
4. . Interact With Customers
5. Focus on Revenue and Retention
6. Increase Value for Your Customers and the
Organization
7. Present a Single Face Across Channels

28. 8. Enable Information
9. Create Business Rules to Drive Decisions
10. Empower Employees with Information and
Training
11. Retain the Right Customers
12. Remember That Cultivating Customer
Relationships is a Way of Doing Business.

29. CHALLENGES FOR CRM
• Defining Clear Objectives
• Appointing a Core CRM Team
• Defining the Processes
• Managing the Application
• Finding the Right Partner
• Not knowing how to measure success
• No change management process
• Inadequate training
• Costing Iceberg

30. REFERENCES
www.sword.ciboodle.com
www.summary.com/bookreviews/
www.icmi.com
www.thinkabout.com
www.rishabsoft.com
www.geocities.ws/akottolli
www.askville.amazon.com