Indian Institute of Management Bangalore
Customer Relationship Management
Faculty: Prof. G. Shainesh
Term VI
PGP (2010-11)
3 Credit Course
Background – The primary purpose of any business is to win and keep customers. Its
competitors also seek to do the same. Most successful firms have developed capabilities
for attracting customers through their marketing programs. But they have shown mixed
results when it comes to retaining these customers. Customer Relationship Management
helps businesses in successfully implementing strategies aimed at winning and retaining
customers profitably. It is also helping businesses shift from a short-term transaction based
mode of operation in their interactions with customers to a long-term relationship mode.
Objectives – The objective of this course is to help students understand the concept and
practice of CRM derived from research and applications across businesses. These
concepts and applications from real life case studies will help identify opportunities, which
can be successfully implemented for long term profitability.
Pedagogy – The teaching methodology will include a mix of lectures, discussions of prereadings, presentations by practitioners, exercises and case analysis. The cases are
integrative in nature but will also help develop an appreciation of specific elements of CRM.
Group Project –
Option 1 - Identify any organisation which is practicing some form of CRM. Start working
with them to understand the objectives, strategy, structure and process of relationship
management. Identify the key issues they faced in implementation especially related to
financial and marketing evaluation of the program. Interview some relationship customers
of this organisation to understand the customer perspective.
Option 2 – Choose any topic in CRM and write a paper based on literature review or use a
data set for analytics to identify opportunities for CRM.
Evaluation –
Case Analysis & Presentations
Group project
Exam
- 30%
- 30%
- 40%
Textbook - G. Shainesh and Jagdish N Sheth (2006),’Customer Relationship
Management – A Strategic Perspective’ Macmillan: New Delhi.
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Customer Relationship Management
Course Outline - PGP (2010-11)
Coverage
The course is divided into four modules Module 1 - CRM Concepts,
Module 2 - CRM Applications in Consumer and Business Markets,
Module 3 - CRM Tools, Techniques and Technologies, and
Module 4 - CRM Implementation
Module 1: Sessions 1-5
The Concept of Customer Relationship Management
Text: Chapters 1-4
This module focuses on the conceptual and theoretical foundations of CRM. A number of
theoretical perspectives developed in economics, law and social psychology are being
applied in CRM. These include transactions cost analysis, agency theory, relational
contracting, social exchange theory, network theory, game theory and interorganizational
exchange behavior. Resource allocation and resource dependency perspectives and
classical psychological and consumer behavior theories have also been used to explain
why organizations and consumers engage in relational behavior. An overview of these
theories will help develop insights on CRM from multiple perspectives.
Other topics include –
 Evolution of customer relationships
 Benefits of CRM
 Transaction vs. Relationship orientation
 Relationship building as a process
 The ladder of loyalty
 Bonding for customer relationship
 Zero Customer Defections
 Market share vs. share of customer
 Lifetime value of customers
Session 1 : CRM : The Strategic Imperatives
Reading – Chapter 1
Session 2: Conceptual Foundations of CRM
Reading – Chapter 2
Case Analysis – Angels and Devils: Best Buy’s New Customer Approach
Session 3: Building Customer Relationships
Reading – Chapter 3
Case Analysis – A Fruitful Passion for Orange
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Session 4: Economics of CRM
Reading – Chapter 4
Case Analysis - Rosewood Hotels & Resorts: Branding to Increase Customer
Profitability and Lifetime Value
Session 5:
Case Analysis – CRM at Capital One
Additional Recommended Readings
Roland Rust, Valarie A. Zeithaml ,and Katherine N. Lemon (2004), “Customer-Centered
Brand Management,” Harvard Business Review, September, pp. 110-118.
Parvatiyar, A and Sheth, J.N. (2001), “Conceptual Framework of Customer
Relationship” in Customer Relationship Management – Emerging Concepts, Tools and
Applications, Sheth, J.N., Parvatiyar, A. and Shainesh, G., Eds., New Delhi: Tata
McGraw Hill, pp. 3-25.
Fournier, S, Dobscha, S, and Mick, D. G. 'Preventing the Premature Death of
Relationship Marketing', Harvard Business Review, January - February 1998, pp. 42-51.
Payne, A., 'Relationship Marketing : A Broadened View of Marketing', in Adrian Payne
(Ed.), Advances in Relationship Marketing, Kogan Page, 1997, pp. 29-40.
Juttner, U. and Wehrli, H. P., 'Relationship Marketing from a Value System Perspective',
in Adrian Payne (Ed.), Advances in Relationship Marketing, Kogan Page, 1997, pp.
223-246.
Module 2: Sessions 6-10
CRM Application in Consumer and Business Markets
Text: Chapters 5-6
This module focuses on applications and practices of CRM in different business
contexts. CRM has been applied in consumer and business markets covering goods as
well as the services sector. Rewards / loyalty programs are the most visible aspect of of
CRM in consumer markets while CRM manifests itself as Key Account Management
(KAM) in business markets. Marketers in the services businesses have been pioneers
in adopting CRM. Review of the concepts and practices of service quality, service
recovery and service guarantees will be done in this module. CRM practices in telecom,
hospitality, retail and airlines and in the durables and automobile markets will be
highlighted through select cases. In addition to KAM, the concept and practice of
Customer value management (CVM) will be covered.
Session 6 -7 : CRM in B2C Markets
Reading – Chapter 5
Case Analysis : Federal Express (A) : The Money Back Guarantee
Session 8 : CRM in B2B Markets
Reading – Chapter 6
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Session 9 :
Case Analysis – P&G : Improving Consumer Value Through Process Design
Session 10:
Case Analysis – Bose Corporation: The JIT II Program
Additional Recommended Readings
Gronroos, C., 'Relationship Approach to Marketing in Service Contexts : The Marketing
and Organizational Behaviour Interface', in Adrian Payne et al. Relationship Marketing
for Competitive Advantage - Winning and Keeping Customers, Butterworth Heinemann, 1997, pp. 82-91.
Shainesh, G., and Ramneesh, M., (2000), 'Status of Customer Relationship
Management in India - A Survey of Service Firms', in Customer Relationship
Management – Emerging Concepts, Tools and Applications (2000), Sheth, J.N.,
Parvatiyar, A. and Shainesh, G., (Eds.), New Delhi: Tata McGraw Hill.
Millman, T.,'Key Account Management in Business -to-Business Markets', in Adrian
Payne (Ed.), Advances in Relationship Marketing, Kogan Page, 1997, pp. 133-144.
Reinartz and V. Kumar (2003), “The Mismanagement of Customer Loyalty,” Harvard
Business Review, 80 (July) 86-94.
Uncles, Mark D., Grahame R. Dowling, and Kathy Hammond (2003), “Customer Loyalty
and Customer Loyalty Programs,” Journal of Consumer Marketing, 20 (4/5), 294-316.
Module 3: Sessions 11-15
CRM Tools, Techniques and Technologies
Text: Chapters 7-9
Information and communication technologies have played a key role in the rapid
adoption of CRM by businesses. These technologies, many of them developed in the
last decade, have helped in automating the customer facing functions of sales,
marketing and service. An overview of the components of eCRM Solutions help
understand the technologies which enable an organization to get a single unified view of
its customers across various ‘points of contact’. A balanced approach of CRM combines
both operational and the analytical technologies. Data warehouseing and data mining
form the support base for both operational as well as analytical CRM. The role of
datawarehousing and datamining tools and applications are highlighted to help
appreciate the analytical aspects of CRM. Coverage includes the three main
components of comprehensive CRM solutions include Campaign Management, Sales
Force Automation, and Customer Service and Support.
The functionalities and applications of a few popular CRM products targeted at large
enterprises (Siebel, SAPCRM) and a few targeted at the small and medium enterprises
(SalesLogix, Microsoft CRM) will be covered. An overview of the emerging hosted CRM
products (Salesforce.com) is also provided.
Finally the role of contact centers in building customer relationship is highlighted.
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Topics include
 Sales Force Automation
 Customer Service and Support
 Marketing (Campaign Management)
 Datawarehouse & datamining
 Evaluating technological solutions for CRM
 Role of a contact center in building relationships
 Components of a contact center
 Economics of a contact center
Session 11: Components of eCRM Solutions
Reading – Chapter 7
Session 12:
Case Analysis – Pilgrim Bank: Customer Profitability
Session 13 : Product Offerings in the CRM Market Space
Reading – Chapter 8
Session 14: Contact Centers for CRM
Reading – Chapter 9
Session 15:
Case Analysis – Hilton Hotels: Brand Differentiation through CRM
Additional Recommended Readings
Zeithaml, Valarie A., Roland T. Rust, and Katherine N. Lemon (2001), The Customer Pyramid:
Creating and Serving Profitable Customers,” California Management Review, 44 (Summer),
118-142.
Shoemaker, Mary E. (2002), “A Framework for Examining IT Enabled Market Relationships,”
Journal of Personal Selling and Sales Management, 21 (Spring), 177-185.
Harrison-Walker L. Jean and Sue E. Neeley (2004), “Customer Relationship Building on the
Internet in B2B Marketing: A Proposed Typology,” Journal of Marketing Theory and Practice, 12
(Winter), 19-35.
Reinartz, Werner J. and V. Kumar (2000), On the Profitability of Long-Life Customers in a
Noncontractual Setting: An Empirical Investigation and Implications for Marketing,” Journal of
Marketing, 64 (October), 17-35.
Rust, Roland T., Valarie A. Zeithaml, and Katherine N. Lemon (2004), “Customer-Centered
Brand Management,” Harvard Business Review, 81 (September), 110-118
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Module 4: Sessions 16-20
CRM Implementation
Text: Chapters 10-11
The last module will focus on issues related to CRM implementation. The organizational
challenges of implementing CRM is underscored by the high levels of failures in
implementing technology intensive CRM solutions. This module adopts a process
oriented view of CRM implementation.
Topics include
 The CRM Roadmap
 Defining a CRM strategy
 Developing a relationship orientation
 Internal marketing
 Budgeting for Attraction vs. Retention
 Learning from Customer Defections
 Evaluating Retention Programs
Session 16-17: The CRM Roadmap
Reading – Chapter 10
Case Analysis – Grey Worldwide: Strategic Repositioning Through CRM
Session 18: Operational issues in implementing CRM
Reading – Chapter 11
Case Analysis – Customer Profitability and CRM at RBC Financial Group
Session 19: Group Project Presentations
Additional Recommended Readings
Mookerjee, A. and Shainesh, G., (2000), 'Developing Measures for the Service Quality and
Relationship Strength Determinants of Customer Loyalty', in Raghavachari, M. and Ramani, K.
V., Delivering Service Quality : Managerial Challenges for the 21st Century, Macmillan India Ltd.:
New Delhi, pp. 29-35.
Reichheld, F. F., 'Learning From Defections', Harvard Business Review, March-April
1996, pp. 56-69.
Rust, Roland T., Katherine N. Lemon, and Valarie A. Zeithaml , “Return on Marketing: Using
Customer Equity to Focus Marketing Strategy,” Journal of Marketing, 68 (January), 109-127.
Timothy L. Keiningham, Bruce Cooil, Tor Wallin Andreassen, & Lerzan Aksoy (2007), A
Longitudinal Examination of Net Promoter and Firm Revenue Growth’, Journal of Marketing,
Vol. 71, July, , 39–51
Thomas, Jacquelyn S., Werner Reinartz, and V. Kumar (2004), “Getting the Most out of All Your
Customers,” Harvard Business Review, 81 (July-August), 116-123.
Session 20:
Case Analysis – Implementing a Technology Based CRM Solution - The ICICI
Experience (pp. 184-192 of text book)
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Preparation Questions
Session 3: A Fruitful Passion for Orange
1.
2.
3.
4.
What are the drivers for CRM adoption at Orange?
What unique features does Orange have that make it a good / poor candidate for CRM?
How has the company’s culture and organization helped / hindered its adoption of CRM?
How is the concept of value used to perceive and segment customers, rate company
performance and drive the adoption of CRM?
5. Why are accurate and appropriate performance and payback measures essential to
CRM implementation?
Session 4: Rosewood Hotels & Resorts: Branding to Increase Customer
1. Why is Rosewood considering a new brand strategy?
2. What are the pros and cons of moving from individual brands to a corporate
brand?
3. Will the move to corporate branding maximize customer lifetime value?
Session 5: CRM at CapitalOne
1. How would you define CRM briefly and succinctly?
2. If it is to become more than a concept, CRM needs to be translated into specific
activities and processes. Based on the case, what are key CRM activities and processes
of Capital One? Do they differ between lifecycle stages of a customer?
3. What can be learned from the CRM practice at Capital One that could be applied to
financial services companies in India? What aspects cannot be applied?
4. It is often claimed that CRM can create competitive advantage. Does CRM create
competitive advantage for Capital One? If so, how?
Session 7: Federal Express (A) : The Money Back Guarantee
Questions given in the case (NO PRESENTATION)
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Session 9: P&G : Improving Consumer Value Through Process Design
1.
What were the key decisions taken by Procter & Gamble in relation to the distribution
channel? Could a mid-sized manufacturer have used this approach?
2.
How important are the new information technologies in Procter & Gamble’s efforts?
3.
To what extent has P&G changed its strategy to take advantage of ECR?
4.
What do you think the next steps are?
Session 10 : Bose Corporation : The JIT II Program
1. How do Bose’s history, strategy, and sourcing policies affect supplier relations? Is Bose
a good buyer?
2. Where is the buying and selling done in this context?
3. Should Bose participate in the JIT II program? Should G&F? What are the potential
benefits and risks for both companies?
Session 12: Pilgrim Bank – Customer Profitability
1. How do retail banks make money from their customers? How much variation is there in
profit across customers? Based on this, what do you recommend the bank do in terms
of matching service levels to customer profit levels?
2. Based on the sample of customer data for 1999, what can Green conclude about
average customer profitability for Pilgrim Bank.’s entire customer population?
3. Is the difference in average profitability between online and offline customers in the
sample indicative of a meaningful difference in profitability across these groups for
Pilgrim Bank’s entire customer population?
4. What role do customer demographics play in analyzing customer profitability for online
and offline customers?
5. What is your recommendation to the senior management team in terms of Pilgrim Bank’s
online channel pricing strategy? Should the bank charge fees, offer rebates, or do
nothing in regards to pricing for online channel use?
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Session 15: Hilton Hotels: Brand Differentiation through CRM
1. What is Hilton’s core business? What is the value of a brand in the lodging industry?
2. Evaluate the performance of the Customers Really Matter at Hilton. Assess efficiencies
at the Call Center and the impact of the CRM initiative at the properties.
3. What do you think Hilton leadership should do after the Blackstone acquisition? Should
they further invest in CRM or simply maintain the status quo? What aspects of Hilton’s
CRM should be strengthened, if any, and how?
Session 17: Grey Worldwide – Strategic Repositioning through CRM
1. Analyse the Asian CRM market. What opportunities and threats could Grey WWHK/China leverage to enhance its business model?
2. What is your understanding of CRM?
development of CRM?
How can Grey WW-HK/China pursue the
3. Compare traditional customer service with CRM. What traditional business assets can
Grey WW-HK/China relay on and how it can leverage them to capture e-marketing
capabilities?
4. How can Grey WW-HK/China redefine client value using CRM; what differentiation
technique should it employ?
5. How can Grey WW-HK/China integrate its back-end and front-end processes to enable a
customer-oriented CRM process based on its existing business strengths?
6. Build a customer process blueprint that Grey WW-HK/China can employ to maximize the
utility of its existing customer base.
7. Build a framework for Grey WW-HK/China to assess its CRM strategy. Based on this
assessment, how should Grey WW-HK/China position itself in Asia’s CRM market?
8. Suggest criteria that Grey WW-HK/China should use to measure its CRM performance,
given its business model.
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Session 18: Customer Profitability and CRM at RBC Financial Group
1.
Evaluate RBC’s strategy and organizational structure. Is RBC well equipped to compete
with niche operators such as Internet-only banks with focused product offerings?
2.
RBC is unique in how it computes the lifetime value of its customers.
a. What additional insights are likely to come from lifetime value computation for
customers as opposed to annual customer profitability numbers?
b. Should RBC compute lifetime values at the segment level or the individual
customer level for strategy formulation? How about strategy execution?
3.
Do you agree with RBC’s decision to withhold profitability, potential, and segment
information from its front-line employees?
4.
Should Reich make the car loan to “Niece” and if so at what interest rate?
5.
What should RBC do about customers who are unprofitable because they use the retail
branches and ABM machines for bill payments?
6.
What are the differences in how customer’s profitability is computed at RBC and Pilgrim
Bank?
7.
One of the new concepts covered in this case is profit potential. It is sometimes called
lifetime value of a customer. The case talks about two methods to compute profit
potential. What are the pluses and minuses of the two methods? How hard will it be to
implement the second method for 20 products? RBC computes only a five-year value of
each customer (instead of lifetime value). Why?
Session 20 : Implementing CRM at ICICI
1.
List the factors in the macro environment which impacts ICICI’s retail business.
2.
What is ICICI’s strategy in the retail financial services business?
3.
Why does ICICI want to build long term relationship with its customers?
4.
How did it go about selecting and implementing a CRM solution?
5.
What lessons on CRM can be generalized from ICICI’s experience?
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