Management Information System
Prof. Surojit Mukherjee
Vinod Gupta School of Management
Indian Institute of Technology, Kharagpur
Week - 04
Supply Chain Management
Lecture - 15
Customer Relationship Management
Hello everybody. This section, we will be talking about an area called Customer
Now, this is something an extension of ERP, I would say. So, like beyond ERP, like I
said that in the previous section, in last slide, we mentioned that the new developments
which are taking place after the ERP. So, once ERP was over and people implemented
ERP, then you know people realized that we need more software because it was a big
So, one of the first extension which was developed was and is known as Customer
Relationship Management. So, these are lately the branch out of the ERPs, there were
some part was covered under the sales and distribution module. Because after all CRM is
all about customers and marketing etcetera.
But then it started to grow. So, when it grows, it becomes a separate software altogether
and it can be used by itself , because sometimes you can implement a CRM software
without even having an ERP and you can integrate that with your existing ERP of course
anyway. For an ERP software, you can buy SAP, and the CRM product you can buy
from some other vendor. But they all talk to each other and they can be very easily
linked because as I told you also when you have an ERP in place, everything has to
finally flow into ERP. All financial information flowing from any transaction must go to
the ERP system. So, as either a credit action or a debit action will be recorded in SAP’s
book of accounts.
CRM is a tool for managing a company’s interactions with its customers and sales
prospects. So, it is talking about customers. Often CRM is equated with automating
business process related to sales and marketing and customer service, but CRM is just
not technology products but it also helps in doing lot of business transformation. It is just
not a software, but it can develop lot of knowledge system which comes out from these
transactions. So, lot of reports, knowledge and information about customers’ behavior
and preferences etcetera get generated from CRM tool.
So, that is what is what people really look forward to because all these knowledge helps
them to take future decisions. These are supporting your decision making. So, it is a
decision support system you can call. It involves strategy and redesign of business
processes with the overall goal to find, attract and win new customers.
Retaining those customers and finally, getting feedback from them to better design
company’s products and customer facing processes. So, it is always you are you thinking
about improvement, improvement and improvement. So, that is the whole thing about a
business goal that you need to improve your products and services and your customer
relationships because relationships matter. Relationships is what brings you more and
CRM can also reduce the costs of marketing, sales and retaining customers. So,
whenever you implement or invest money in such software’s; again, as I told you
repeatedly, these are not cheap, these are quite expensive software’s; you are investing
lot of money not only in the product, but also in the implementation project and you saw
how complicated these projects are. It takes lot of time lot of consultancy effort so that it
gives benefits by getting more business and of course, the other part is reducing cost.
CRM uses People, Process and Technology to gain insight into the behavior of
customers. So, again, here we were talking about same thing what we did earlier in the
case of ERP. CRM can bring together information from all data sources within an
organization and give one holistic view of customer in real time.
So, it is doing lots of analysis. Data gets captured, basically when you are executing lot
of transactions related to sales etcetera and then, you are doing lot of smart analysis and
getting reports. So, give you an overall high-level view about that customer; how much
he is buying, when is he buying, what sort of product he is buying, what are his likes and
And then, you get real insights into your customer and then, you can push things which
are more relevant for the customers and these are things which gives customer delight.
So, I think these are the things which are happening in a great extent in e-commerce.
You must have seen the Amazon, Flipkarts etcetera. They have lot of experience;
everybody is having now experience with these kind of e-commerce platforms and that is
where you see the impact of CRM in a very big way. Much more than what you see in a
conventional industry like a manufacturing industry for example, or automobile industry;
but e-commerce businesses are using CRM in a very big way.
CRM allows customer facing employees from sales, customer support and marketing to
make informed decisions on everything from cross-selling to up-selling. So, with the
help of this tool, sales guys are getting lot of on the spot information so, that probably
you can sell something extra. Probably, he is come for one product and probably but we
can find out that he is interested in something else from CRM analysis reports.
So, we can also showcase that and we can additionally tell the customer that we have
items which he likes and uses and we are aware of that fact. So, we can sell more, we can
up-sell, probably he came to buy something of the medium grade but we can sell him in
higher grade product, the more value-added grade which is more expensive. So, finally,
it is more business more revenue, more money and all this is made possible with
customer knowledge gained from CRM data. So, from your angle that is what you want.
Benefits of CRM - So, its higher productivity, better cross-sell, up-sell; Improved
customer service and satisfaction; Better opportunity closure; Focused marketing,
reduced sales and marketing expenses; better profitability, and increased customer
retention loyalty. Most of these benefits I was talking earlier; but I will talk more about
that here. So, better cross sell, up sell etcetera you can do because you have information
readily. When the customer comes in to your store, from your screen, you get the
information and you know what he wants, what he likes; what he desires and what he has
So, you can sell him something more than what he really came for. So, that is better
business for you. Improved customer service because when customer readily gets
information whatever he likes, dislikes; he gets a satisfaction. Yes, ok, this the supplier
or the business man, he knows what I actually like, what I prefer.
So, that is the customer relationship which gives satisfaction to the customer.
Better opportunity close - means you can close deals faster etcetera, because information
about your customer is readily available. So, you can take decisions and the customer
can also take decisions. So, the deal gets closed quickly.
Focused marketing, - you can focus on particular product because you now know the
customer. You know his behavior, you know his buying pattern, his preferences you
have all the analysis about him. So, now, you can really target what products to push him
and at what time or what season etcetera. That is at which time of the year, he buys
something. You have so much information of the customer, you can really push
particular item etcetera; brand, color, dress, everything you know about his likes and that
is your strength.
CRM application areas: The various areas, where CRM is used are :- Sales Force
Automation, Revenue and Pricing, Product Configuration, Order Management, CRM
Analytics (of course, everywhere any modern software has to have analytics),
Marketing, Field Service, e-Commerce, Call Centre, Partner Relationship Management. I
will just quickly cover all of these areas so, I have to go through a bit fast. For some of
them nothing much to explain because it is very understandable.
Sales force automation; - typical areas of sales force automation like you know sales
force is all the frontline sales who are going into the market and selling. So, that is the
dealing with dealers and this is called sales force automation.
Contact management, - deals with all the contacts to whom they need to go for business.
It is all information dependent, where I am going and meeting a potential customer, if I
know some information about him or her, in advance, it helps me in dealing with him.
Lead management, opportunity management, sales forecasting and pipeline, sales
performance management, territory management, quote generation. These are typically
standard selling activities and nothing new. It is all technical sales and retail sales or
whatever. These are typical sales functions and not directly dealing with the ‘relationship
But what CRM mainly does is where automation of the application helps with giving
insights and information. The subject we are talking today is “managing information” not
the “technical sales” part. CRM helps in giving information related to the areas of
Territory management and Quote generation. It is helping in quote generation because
you know the product and you know the customer, you know what he wants etcetera.
Often, as soon as you meet him, he wants you to immediately give him a quote using
Sometimes you can use even handheld devices which we will talk later maybe through
your iPad or special handle devices or a simple tablet or maybe even your phone. So, we
can connect to the company’s CRM system and generate a quote on the spot and give
him the quotation.
So, these are things with which we really impress the customer, by giving faster
response. It is not an individual customer, you go to a retailer, you go to a distributor into
the shops, you go and see if he wants a list of things which you can type it out there itself
in your I-pad or Tablet and give him a quotation right away there itself. It can be sent by
email and the retailer gets the quotation in his computer.
So, the job is done, very fast. Earlier, in the manual process, I would go back to my
office, then sit it in my computer, type it out and send the quotation etcetera thus taking a
long time. But with CRM things move very fast. So, that is what all automation is about.
So, that is why you call it Sales Force Automation.
I will repeat what I said earlier. Sales force automation in daily jobs is aimed at
increasing their productivity because you can now, do things much faster and better with
more efficiency. That is what productivity is all about.
So, with these applications sales personnel no longer need to remember or store contact
information of thousands of company, existing customer products. SFA helps them to
manage new leads and sales opportunities and these have helped sales officers in better
managing sales in their territory and tracking sales performance based on which they
have get incentive compensations. So, everything is now recorded and automated
etcetera, and system driven. So, there is nothing manual work, entering in your dairy,
with a pen and paper etcetera.
Field service application - As companies need to manage a large number of mobile
technicians distributed across various customer sites. These are mostly used for utilities
service areas, for example, electricity distribution and other civic maintenance services.
When something goes wrong in say utility services like power distribution, civic
amenities and there is a customer complaint, you have to send a technician. Using this
tool, they can know which of the field service managers or technicians are currently free.
So, as soon as I get a customer complaint, I can assign somebody or I can assign the right
person, having the required expertise to the problem. So, for that requirement the skilled
person is available and I assign him the job. In Europe, wherever they are using
optimization techniques by locating the right person available closest to the problem
area. Since here all technicians drive their cars, maps (like Google maps) are used for
locating the nearest person and to help him by suggesting the shortest driving route to the
maintenance spot. This helps to save time and cost and gives better and prompt service to
the customers. So, that is how they optimize their field service force. So, that is through
this application, Field Service Application and these are also now coming to countries
like India. We have also stated using similar optimization softwares .
These are what I have discussed.
E-commerce applications: - Typical capabilities of e-commerce as I was telling ecommerce
is heavily using CRM. eMarketing, Campaigns, Personalization, Online
ordering, Online product configuration, Online auctions, Online exchange and return,
Online billing and payments. So, we are doing all of that. So, when we use Amazon or
Flipkart, we see e-marketing, lots of marketing advertisements keep coming in,
campaigns, we know discounts etcetera offers are made.
Personalization- because they are capturing all clicks, they know what we like or dislike
etcetera, what we ordered last time, last when we ordered. So, they will personalize, and
those similar things will be projected on our screen as ads for example.
Online ordering, - we are doing it almost every day, everybody is nowadays using online
Online product configuration, - we can also decide what combination etcetera. We can
do online auctions, you can take part when the e-auction sites like eBay etcetera, where
you can you know quote, you can offer something that you will pay this much and if
your quote is accepted, you get that material for that particular price whatever you
proposed. Related applications are- auctions, online exchange and return, online billing
So, nowadays, we are very conversant with e-commerce because everybody is using it.
Sitting at home in the lockdown period, we are ordering things, food, clothing, grocery,
shirts, books etcetera. The companies use these applications for variety of purposes like
product search, buying through shopping cart, product promotion, personalization, crosssell,
Today e-commerce is becoming even more powerful with Web 2 dot 0, second
generation. It has even spread to small towns and rural areas. And, you can see people in
the rural areas using, ordering things through their phone and people have become so
smart that technologies have become all pervasive, they have spread out to small towns,
villages etcetera. People are using their mobile phone to order things. So, it is not
restricted to metros and cities anymore. Easy availability of smart phones and data
services have played a great role in spreading the popularity of e-commerce.
Call center, contact center applications; - Typical capabilities of call center applications,
we all are quite familiar with in India. We are very big call centre service providers,
lakhs of young people are working in call centers in India, we are one of the largest Call
center service providers in the world. The next largest probably is Philippines in Asia,
China is quite behind us.
The typical capabilities of call center applications are: - Predefined escalation route,
Previous records of the caller, Support in different time zones in different languages,
Managing call assignments, Knowledge base, Self service capabilities, Workflow
In short, companies across the world, are using these call centers for giving service to
their customers. Say a company in US having customers in US, there were problem.
They call up a call centre. The call centre is actually located in Bangalore. So, a person
sitting there receives the call and then, helps the customer so that his problem gets
solved. And there are various types of call centers doing not only voice support, they are
doing lot of transactions for back office work. Transactions for maybe some accounting,
legal procedures, medical transcription etcetera, you see there are several things which
are happening here in India for companies which are located anywhere in the world e.g.
United States, Europe, Germany , Japan anywhere.
So, all that work is coming here and are being delivered through call centre. The entire
management and the knowledge management is part of that CRM tool which is being
used to manage the entire team because everything is knowledge based. It is all
management of knowledge and it is information based.
So, here, knowledge means information. It involves lot of IT including hardware, and
software of course including CRM. The information system has to be managed because
it has to work 24 by 7, because they are working on different time zones and even in
So, there has to be a knowledge base and there has to knowledge repository and so that
people can take over the problem and also understand the problem, because you have to
resolve the customer’s problem over the phone and you cannot just say you will collect
information and call back after some time to solve the problem.
So, these solutions provide customer support by answering the different types of
customer as mentioned. They use varieties of technologies like local area networks,
automatic call distributor ACD for running these operations. Computer technology
interaction (CTI) Web Integration, Interactive Voice Response (IVR), Voice Logging
and Messaging etc. It goes to show that there is lot of technology involved in this
business. We apparently just see maybe a person receiving a call and talking over phone,
but when he or she is looking at her screen to respond to that phone call, there are lot of
technologies working behind that screen.
What we need to run all this is also MIS (Management information system) and are a
part of the information system. Complex information system is involved in this because
you know its 24 by 7 operation and is having somebody talking 1000s of kilometers
away in a different time zone; maybe when it is daytime, there it’s mid-night here, when
the servicing is being delivered.
So, call centers today are capable of supporting complex customer interactions such as
scheduling, service request, providing technical support, and handling financial
transactions. This is becoming more and more sophisticated, developed and complicated.
It is just not just receiving a phone call and giving a solution. Those things all still there,
but there are many sophisticated applications in call centers as well.
Partner relationship management applications, typical capabilities of relationship
management are partner addition, distributing leads, partner profiling, managing
different partner programs etc.
Partner means with anybody you do a business; so, your vendor can be a partner, your
supplier can be a partner, very important partners because with their help you are getting
some service or product and then, with that, you are being able to service your customer
at the same time. So, managing channel inventory, partner pipeline are the various
capabilities of partner relationship management.
Marketing management application again typical capabilities of marketing are campaign
management, customer interaction management, marketing planning, marketing
resource, opportunity or lead management and loyalty marketing.
So, what is important from our course perspective in MIS is that these are all typical
marketing activities. All of these are supported by this particular software called CRM
application. That the name of the software could be different from vendor to vendor and
when you are using a CRM software for the same marketing activities which you used to
do earlier without that software, now you are able to get lot of information.
So, lot of data is getting captured centrally into that software and that is generating lot of
information and report for you so that you can take decision - the right decision or the
best decision in time and you can take it very early. So, you do not take much time to get
it. Over the phone, looking at your screen, a customer calls you up like the example I
showed you in the ERP session, you can respond to the customers queries by looking at
your screen and punching some keyboards and getting some information about the
You can tell him sir; this amount is outstanding; you have not cleared my last few
supplies payment. So, then again, immediately you come at advantageous position. So,
he is at the back foot now. He will try to defend, no fine, I have delayed. I will pay you
etcetera, what can you give me now etcetera.
So, whenever you are doing let us say campaign management, for example, and you are
capturing data for several customers because you are giving them forms, asking them to
fill up their information like- date of birth blah blah etcetera. So, many personal
information, phone numbers etc. get collected. And then, you give it over to your say call
centre and then the call center starts calling up these numbers. Is there any requirement
for a loan or whatever like those calls which come from call centers. All of us have
experienced such calls for taking loans, buying insurance policies etc.
You have collected all the information through this campaign management. You have
collected lot of data, and now you are using that. So, that is the purpose of that software,
the CRM software is to collect data so that it can create and generate information, reports
for you to utilize that either to take decision or to grow your business and do new
Your whole purpose as a marketing person is to increase revenue or business for your
company and that you are doing utilizing this software which is helping you to do it
better, faster with less time maybe even with less people. So, you are more productive,
more efficient and you are more cost effective because you are using less people and less
So, your company had invested money in buying that CRM software, but now you have
to reap the benefits. Two ways I told you earlier also that you reap the benefits; one is
you reduce your current cost of operation and second is you increase your business
revenue. So, you have more revenue and you make more profit.
Like here it says marketing automation which is of our interest. Automation also
encompasses capabilities for managing customer loyalty, lists, collateral and internal
So, when you have repeat customers and you give them special benefits because you
know they are repeat customers, you generate something called as customer loyalty. So,
you retain that customer and that customer always wants to come back to you because
you give them something which they like. You give them some delight maybe you give
them, some extra discount or whatever so that it is generating customer loyalty.
And all that you cannot do without the help of that software because you need the
information, what the customer wants, what the likes, how many times you have given
them discounts earlier, what was their reaction to that, what is their feedback, are they
giving me 5-star feedback etcetera which, I can use in my e-commerce site. So, the other
customers you know they get impressed that this product is getting 5-star feedback from
so many people. So, it must be a good product. So, they will buy. So, that is how your
revenue will increase.
So, this tool supports an integrated approach to marketing strategy, development,
delivery measurement across the marketing mix. So, that is the importance and
significance of the tool as it gives an integrated approach to all the marketing functions.
These are standard functions which was always there; strategy, development, delivery.
But the tool is used to measure all the things and across the marketing matrix. So, it is
measuring, getting data and once you get a data, the software can do a lot of things. So, it
is measuring, analyzing etcetera and then, giving you intelligence.
Revenue and pricing management application; - typical capabilities of revenue and
pricing management applications are trade promotion management, promotions, pricing
and promotion optimization. So, when you do a promotion and management, what you
do? You offer lot of incentives or discounts etcetera - why? Because you want to attract
new customers and you want to sell more. So, that is why you offer incentives during
So, maybe you are you doing a seasonal promotional activity. So, you want to go out to
the field, attract customers and of course, then you want to sell more and there again also
you need this sort of tools because each customer comes in and they fill up a form
etcetera and you transfer all the data to your system, which you can use in future.
Because once that customer’s basic data is captured, then you can use it for your future
business and you can contact them, come up with more offers. You can again go back to
them, with this new offer, and ask whether they would be interested?
So, these applications help companies to optimize and manage prices throughout the
product life cycle including initial pricing, promotional and markdown or clearance
pricing. So, there are various pricing things which you know the marketing people use
and, these applications help you to actually manage that. So, that is a case of managing
information system of revenue and pricing, which we are discussing right here.
Product configuration application: These tools are popular for complex products and
services. So, when you are designing a new product for examples, or helping customers
to configure a product as per their desired specifications on the web. One example is
Dell. When Dell came up with desktops, what they did was on their site you could go
and select the components as per your choice. So, it was not a standard desktop that was
being offered. As a customer, you could configure - so much of RAM and so much of
hard disk space, this particular processor, this particular mother board or whatever so
many USB ports etcetera and then, based on that configuration, the price will be
calculated. And once they agree, yes fine, they can deliver at that price you make the
payment and the desktop as per your design gets delivered.
First introduced by Michael Dell, of Dell Corp. about 10 or 15 years back, the company
soon became one of the largest suppliers of desktops in the world. This is a very complex
way of handling things. So, you can actually configure your likes into a product. Based
on this the company’s sales staff can quote and generate quotation. These applications
can automate sales and product configuration, proposal configuration, cost estimation
and pricing and compress the entire lead-to-order process. So, everything is happening
online on a system software. So, you do that immediately, the calculation is done and the
quotation is made, and you once approve the price, the order gets released and product
So, whole thing probably takes 15 minutes to 20 minutes. You have placed an order for a
computer, configured by you, and not just not a standard computer. Thus, whatever
specifications you wanted, you have built it into that product and that is what is being
delivered to you. Without much of or any manual intervention that is what is important.
Nobody talked to you etcetera and you just did it online with options like drag and drop
and things like that.
CRM analytics - so far any software, you know analytics is one of the key thing and in
this we have - Sales analytics, Marketing analytics and Customer service analytics. So,
analytics means once you have data, the analytics just happens and you get all sales
related KPIs and reports, graphical dashboards etcetera. Marketing analytics generally
come with predictive analytics so you can know how to improve customer segmentations
and targeting tools to measure the effectiveness of a marketing sales promotion.
If I do a sales promotion, I have to invest some money, I have to go to a hotel, book a
hotel rooms, spend money, invite customers and then, give them some tea-snacks or food
or whatever. So, lot of money goes in to promotions. So, if I spend money, what is the
sort of business it can forecast? So, where, the forecasting will be through these
analytics. All this can help me in calculating the ROIs?
The analytics from previous information or data will tell you, fine if you can do such a
campaign, invest money, probably you will get so many customer, then so many
bookings. So, your ROI will be whatever x, y, z. Now, whether you accept it or not
accept it, is up to you and that is the mangers discretion.
Customer service analytics are increasing in popularity as companies demand greater
visibility into the performance of call centers and all support channels in order to correct
problems, before they affect customer satisfaction levels.
So, we try to capture lot of customer data. Like whenever you order a food, say delivery
by Swiggy, then after the order is over or is delivered, then there will be a feedback will
come out and they will show stars and you have to rate 3 star, 4 star, 5 star etc. based on
the service quality. Same, every time you travel in a taxi like OLA or Ubers.
So, every time you see people are asking for your feedback because that is the thing
which they need for their advertisement.
So, what we are doing? We are spending our time to give them feedback which they are
using for their business. But in return, what I am getting? I am not getting anything in
money terms or whatever, but probably you can say in future, we will get better service.
If that company does well, they will give us better service, may be better discount or
whatever. We do not know, but some benefits may come.
But still we as a customer, everybody and all of us are spending our personal time to give
customer feedback, satisfaction feedback in various things. In all
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