MBA Exam: CRM & Customer Focus

Cheatsheet Content

### CRM (Customer Relationship Management): Introduction and Scope CRM is a business strategy and technology framework designed to manage, analyze, and optimize all interactions with customers throughout their lifecycle. It builds long-term, mutually beneficial relationships to increase satisfaction, retention, and profitability. #### Definition and Core Concept CRM is a philosophy and technology that helps businesses understand customers better, serve them effectively, and grow. It centralizes customer interactions and sales activities, providing a unified customer view. **Example**: Amazon's CRM tracks browsing, purchases, reviews, and service interactions. This 360-degree view enables personalized recommendations and targeted marketing. #### Objectives of CRM 1. **Enhancing Customer Satisfaction**: Personalized, timely service. 2. **Increasing Customer Retention**: Building loyalty. 3. **Boosting Sales and Revenue**: Targeting, upselling, cross-selling. 4. **Streamlining Business Processes**: Automating tasks like lead tracking, follow-ups. 5. **Improving Decision-Making**: Using data analytics for strategies. 6. **Enabling Team Collaboration**: Unifying sales, marketing, and support. **Example**: Bharti Airtel uses CRM to identify customers at risk of churning based on usage patterns and proactively offers retention incentives. #### Scope of CRM ##### Operational CRM Focuses on automating and improving customer-facing processes (sales, marketing, customer service). **Key Components**: - **Sales Force Automation (SFA)**: Managing leads, opportunities, sales pipeline. - **Marketing Automation**: Campaign management, email marketing, lead generation. - **Service Automation**: Case management, call center operations, support ticketing. **Example**: A pharmaceutical sales team uses operational CRM to track doctor visits, manage samples, schedule follow-ups, and record feedback from the field. ##### Analytical CRM Focuses on analyzing customer data to uncover insights, predict trends, and support data-driven decisions. **Key Components**: - Customer data analysis and reporting - Sales forecasting and trend analysis - Customer profitability analysis - Customer segmentation and targeting - Predictive modeling (churn, lifetime value) **Example**: An e-commerce platform analyzes purchase history, browsing, and cart abandonment to identify high-value segments and predict product recommendations, increasing cross-sell revenue. ##### Collaborative CRM Aims to improve communication and information sharing between departments and with customers. Ensures consistent, coordinated customer experiences. **Key Components**: - Interaction management across channels (phone, email, social media) - Channel management for seamless omnichannel experience - Document and knowledge sharing - Partner and vendor collaboration **Example**: A bank customer starts a loan application online; a call center rep can immediately access its status and past interactions, providing a seamless conversation. #### CRM Process Flow 1. **Customer Acquisition**: Attracting potential customers. 2. **Customer Profiling**: Collecting demographic, behavioral, transactional data. 3. **Lead Nurturing & Conversion**: Engaging leads and converting them. 4. **Customer Service & Support**: Post-purchase assistance, issue resolution. 5. **Retention & Loyalty Building**: Programs, benefits to keep customers engaged. 6. **Continuous Improvement**: Refining strategies based on data. **Example**: A B2B software company acquires leads via LinkedIn, profiles them, nurtures with webinars, converts with demos, provides onboarding, and maintains engagement with reviews and updates. ### Touchpoint Analysis Touchpoint analysis systematically identifies, maps, and evaluates every interaction point where customers engage with a brand throughout their journey. Each touchpoint is an opportunity to create positive experiences. #### What are Customer Touchpoints? Specific instances or channels where customers interact with a business before, during, and after purchase. These can be initiated by customer or company, across digital and physical channels. **Example**: For a banking customer, touchpoints include seeing an ad, visiting the website, receiving emails, speaking with a manager, using the mobile app, ATM, and calling customer service. #### Types of Customer Touchpoints ##### Before Purchase Touchpoints - Online advertising, organic search, social media posts - Print ads, TV commercials, word-of-mouth - Blog posts, events, product reviews **Example**: A potential MBA student researching programs encounters Google search results, LinkedIn posts from alumni, university rankings sites, and educational fair booths. ##### During Purchase Touchpoints - Company website, product pages, e-commerce platform - Sales representatives, point-of-sale systems - Checkout process, payment gateway, chatbots **Example**: When buying a laptop, touchpoints include browsing specs, comparing models online, chatting with a sales bot, and completing payment. ##### After Purchase Touchpoints - Order confirmation emails, shipping notifications - Product delivery, unboxing experience - Customer service, billing statements, feedback surveys - Subscription renewals, loyalty program communications **Example**: After subscribing to a SaaS product, customers receive onboarding emails, access to a knowledge base, usage reports, renewal reminders, and webinar invitations. #### Touchpoint Mapping Process ##### Step 1: Define Objectives and Scope - **Goals**: Improve satisfaction, increase conversion, enhance loyalty. - **Scope**: Entire journey or specific stages. - **Customer Segments**: Which personas to map. **Example**: An e-commerce fashion brand maps the complete journey for its "young professional" persona to identify cart abandonment friction points. ##### Step 2: Gather Customer Insights - Interviews, surveys, service transcripts, complaint logs - Website analytics, social media interactions, sales data **Example**: A restaurant chain conducts exit surveys, analyzes online reviews, monitors social media, and reviews sales data. ##### Step 3: Identify All Touchpoints List every possible interaction across all channels: - Digital (website, app, email, social) - Physical (stores, branches, kiosks) - Human (sales calls, customer service) - Indirect (reviews, media coverage) ##### Step 4: Create Visual Journey Map - Use flowcharts to map chronologically. - Plot each touchpoint, indicating actions, emotions, pain points. - Note owner department/channel. **Example**: A healthcare provider maps the patient journey from online doctor search to booking, reminders, check-in, consultation, prescription, and post-visit surveys. ##### Step 5: Categorize and Prioritize Touchpoints Categorize by: - **Stage**: Awareness, consideration, purchase, retention, advocacy - **Channel**: Digital, physical, human - **Owner**: Marketing, sales, customer service - **Frequency**: High-touch vs. low-touch - **Impact**: Critical "moments of truth" vs. routine **Example**: An insurance company identifies policy renewal as a high-impact, high-frequency touchpoint influencing retention, prioritizing its optimization. ##### Step 6: Analyze and Optimize - Identify friction points or negative sentiment. - Discover gaps in support. - Find opportunities for value or delight. - Ensure consistency. - Track metrics (NPS, CSAT, conversion). **Example**: Analysis reveals frustration with technical support wait times. The company implements a callback feature and expands self-service, improving CSAT by 30%. #### Touchpoint Analysis Best Practices 1. **Maintain Omnichannel Consistency**: Consistent messaging, branding, service. 2. **Reduce Friction**: Minimize customer effort (simplify forms, reduce wait times). 3. **Personalize Interactions**: Use data to tailor experiences. 4. **Monitor Continuously**: Regularly update maps. 5. **Measure Impact**: Track KPIs at each touchpoint. **Example**: Starbucks ensures consistency by allowing mobile, web, or in-store ordering, all synchronized with loyalty accounts, for a seamless experience. ### Customer Lifecycle The customer lifecycle represents the complete journey a customer takes with a brand, from initial awareness to loyal advocacy. Managing this lifecycle maximizes customer lifetime value (CLV). #### Customer Lifecycle Stages ##### Stage 1: Reach (Awareness) Potential customers first become aware of your brand, products, or services. **Key Objectives**: - Build brand awareness and visibility. - Attract target audience. - Create positive first impressions. - Drive traffic to owned channels. **Strategies**: Content marketing, social media, SEO, paid advertising, PR, events. **Metrics**: Brand awareness, reach, impressions, website traffic, social media followers. **Example**: A new fintech startup runs LinkedIn ads, publishes thought leadership articles, and sponsors a conference to create awareness among finance professionals. ##### Stage 2: Acquisition (Interest & Consideration) Potential customers show interest and actively engage with your brand. **Key Objectives**: - Capture contact information. - Qualify leads. - Educate prospects on value proposition. - Move prospects deeper into the sales funnel. **Strategies**: Lead magnets (ebooks, free trials), email opt-ins, webinars, retargeting campaigns. **Metrics**: Lead generation rate, cost per lead, email open rates, content download rates. **Example**: A B2B software company offers a free "Marketing ROI Calculator." Users provide emails and enter a nurture sequence with case studies and demo invitations. ##### Stage 3: Conversion (Purchase & Onboarding) Prospects become paying customers, followed by initial onboarding. **Key Objectives**: - Remove purchase barriers. - Provide smooth buying experience. - Ensure successful product adoption. - Deliver immediate value. - Set foundation for long-term relationship. **Strategies**: Simplified checkout, multiple payment options, sales consultations, free trials, comprehensive onboarding, welcome emails, training. **Metrics**: Conversion rate, average deal size, sales cycle length, time-to-first-value, onboarding completion rate. **Example**: When a company buys an enterprise CRM, a dedicated manager conducts kickoff meetings, provides training, helps import data, and ensures the sales team closes their first deal within 30 days. ##### Stage 4: Retention (Engagement & Satisfaction) Keeping customers engaged, satisfied, and continuing to use products/services. **Key Objectives**: - Maintain high customer satisfaction. - Encourage continued usage. - Proactively address issues. - Identify and prevent churn risk. - Create account expansion opportunities. **Strategies**: Regular communication, customer success programs, proactive support, educational resources, community building, usage monitoring, feedback programs. **Metrics**: Customer retention rate, churn rate, customer health score, product usage, CSAT, renewal rate. **Example**: A SaaS marketing platform monitors user engagement. If login frequency drops, an alert triggers: CSM contacts the customer, who receives an email offering a "health check" and a webinar invitation. ##### Stage 5: Loyalty (Advocacy & Expansion) Customers become brand advocates, making repeat purchases, expanding their relationship, and recommending the business. **Key Objectives**: - Turn satisfied customers into advocates. - Drive repeat purchases and account expansion. - Generate referrals and testimonials. - Increase CLV. - Create brand ambassadors. **Strategies**: Loyalty programs, referral incentives, VIP experiences, customer advisory boards, case study requests, upsell/cross-sell, community leadership opportunities. **Metrics**: NPS, CLV, repeat purchase rate, referral rate, upsell/cross-sell revenue, advocacy participation. **Example**: Apple cultivates loyalty through its ecosystem. iPhone users expand to iPad, MacBook, and services. They participate in communities, leave reviews, and recommend products, becoming advocates. #### Customer Lifecycle Management (CLM) Strategic approach to optimizing customer experiences and business outcomes at each lifecycle stage. **Key CLM Principles**: 1. **Stage-Specific Strategies**: Tailor approaches to each stage. 2. **Data-Driven Insights**: Use analytics to understand behavior. 3. **Cross-Functional Alignment**: Ensure teams work cohesively. 4. **Automation with Personalization**: Leverage technology for scale. 5. **Continuous Optimization**: Measure, test, and refine strategies. **Example**: An online education platform uses CLM with stage-specific automation: awareness-stage prospects get blogs, acquisition-stage leads get mini-courses, new students get onboarding, active students get personalized recommendations, and loyal graduates are invited to become instructors. #### RFM Analysis in Customer Lifecycle RFM (Recency, Frequency, Monetary) Analysis segments customers based on their transactional behavior, helping understand value and lifecycle position. **RFM Components**: - **Recency (R)**: How recently did the customer purchase? - **Frequency (F)**: How often do they purchase? - **Monetary (M)**: How much have they spent? **RFM Scoring**: Customers receive scores (e.g., 1-5) for each dimension, creating segments: - **555 (Champions)**: Recent, frequent, high-spending—most loyal. - **511 (Loyal Customers)**: Regular buyers, moderate spending. - **155 (Big Spenders)**: High monetary value but less frequent. - **511 (At Risk)**: Valuable but no recent purchases. - **111 (Lost)**: No engagement in a long time. **Example**: An e-commerce retailer uses RFM. Champions (555) get early access. At-risk (311) receive win-back campaigns. Lost (111) are moved to minimal-contact nurture to reduce marketing costs. #### Lifecycle Transition Strategies - **Reach → Acquisition**: Use compelling CTAs, value propositions, lead magnets. - **Acquisition → Conversion**: Build trust with social proof, demos, free trials, consultative selling. - **Conversion → Retention**: Exceptional onboarding, quick wins, responsive support, regular communication. - **Retention → Loyalty**: Exceed expectations, reward loyalty, create community, offer deeper engagement. **Example**: Spotify manages transitions: free tier (reach) attracts users, personalized playlists (acquisition) increase value, prompts offer Premium trials (conversion), continuous personalization drives retention, and collaborative playlists create advocates (loyalty).