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In the global business world, customers have become an important aspect of success for companies, and their management is core to the fundamentals that drive the organization forward. Large corporations have taken the active step of investing heavily into various modes of relationship management, also known as CRM. The underlying basic of CRM is to help a company by highlighting the procedures and processes for understanding a customer. Entry-level CRM software provides a company‟s sales staff with valuable information about a customer, including some that could be more of personal nature. Call centre businesses often end up being the biggest users of this software (Wikipedia, 2009), by saving customer details in order to provide a more personable service in the future. However, the whole concept of CRM is not simply software. It is also the frontline staff and employees from the lowest level of the organization, who should be trained in the principles of customer relationship in order for the processes to be more effective and efficient. As a concept, CRM is quite old in practice. Firms involved in both business-to-business (B2B) and business-toconsumer (B2C) marketing has looked for ways to acquire regular clientele‟, which can also be linked to attempts of encouragement in a bid to entice loyalty in customers. The daily consumer experiences this concept at various shopping outlets, either directly or indirectly. The change to marketing and the introduction of CRM in the process can be laid down to the collaboration and cooperation of various entities of a single organization. The CRM structure utilised for business-to-business marketing is quite different from the one used for consumer marketing (Wikipedia, 2009). Either way, it is primarily a relationship process, where companies are looking to cultivate consumers who can provide information that is beneficial to both parties of the trade. The following form the pre-requisites of a CRM program:
For there to be mutual benefits, there needs to be commitment from the company and customer. The cost and time that is utilised for the company is justified, since CRM requires changes to organizational processes. An orientation towards understanding the importance of „non transactional processes‟, which is the foundation for the creation of strategies that maintain the relationship with the customer once the original transaction is completed.
Agreement from the organization to invest implementing in a new or revamped system that could result in changes to the current infrastructure
The requirement of CRM is different for every organization. One example of this is TISCO; a large Anglo-Saxon corporation whose area of expertise is software and compiler development. Over the years, it has undertaken market research into various segments of the consumer-base, understanding where it holds advantages for building relationships. This includes the automobile sector, where better pre-sale service would create differentiation in the end-product (Bose, 2002). In another context, Dell Computers portrays a different view, having succeeded in the computer industry with the growth of small and medium enterprises (SMEs) and home office setups. As their objectives could differ, they may focus on the large companies under the CRM programme, in order to gain loyalty. Before a CRM programme can be formulated, a company must ascertain the true value of its customer. While loyalty and satisfaction are the more generic links for implementing CRM programmes, it is necessary for the
A company losing 50 customers in a given week will be satisfied if it gains 500 new ones anyway. In addition to this. after analysing the trends in consumption and the held inventory. the paths to sales and profits are customer focus and value. many companies could take their customers for granted as there was a lack of alternative suppliers. pp. In such a case where the power is in the hands of the producer. they know where to find me. or the choices available were as poor in quality and service. there is a need to develop a relationship that is fair on all counts. Where there is any form of monopoly. the CRM program should focus on promotional activity as a means of attracting some consumer return. a restructuring of the patterns of orders received should be looked into. 405). An important feature for most companies. From the customer‟s perspective. Operating on what is referred to as a „leaky bucket‟ theory of business (Kotler. Under this concept. 2007). The general perception in business used to be. This reflects the sentiments of the last few years. et. where more consumers are noticing the leverage in the relationship being stronger towards the producer. returning to purchase and offering fewer demands. and to customize future interactions. So. “If they want my services. the producers often ignore any consumer requests for exclusion from further relationship. by the power of word-of-mouth. Of course. customer retention helps the organization understand that the cost of acquiring a new customer is far greater than the cost of maintaining a productive relationship with the current one.. this depends on the amount of choice available in the marketplace in respect to the services or goods that are being offered by the producer. pp.. customer satisfaction must be measured at regular intervals (Kotler et. the consumer can only refuse to respond to calls for the further strengthening of relationship. if the objective is to increase sale of a particular item. especially when viewing the future of relationship marketing. focuses on the needs of customers. your competition‟s marketing systems may find them first (Gage. the company believes that there will always be enough customers to replace those defecting it. The marketing concept takes an outside look and starts with a well-defined market. Retention programs offer a relatively inexpensive means of making customers feel special. Hence. Customer satisfaction is an outcome that is realised when one experiences a company performance that has fulfilled their expectation. al. . There are a number of issues arise that need to be addressed. They also act as an ideal marketing form for producers. 409-10). al. if distribution costs are the objective of the corporation..” The modern understanding has changed to a realisation that while a potential customer is looking for you. Alternatively. This is why customer retention programs offer a powerful tool in the CRM arsenal. coordinates the marketing activities which affect customers and generates profits by creating more long-term Customer Relationships (CR) (Kotler et. This data is used to gain a better understanding of the customers. In the past. al.company to set out a specific objective at the planning phase. Satisfied customers tend to be more loyal to the company. 411 – 412). All companies require a good customer retention system in place in order to thrive in today‟s competitive environment. pp. for a producer to have recognition. There was also the possibility of strong growths which allowed companies to forego on satisfaction levels. retention programs also allow companies to perform data collection activities about their customers.
formulation of strategies and tactics to satisfy market needs. and providing the right offer to the right customer at the right time.GOALS AND OBJECTIVES OF CRM There are four objectives of CRM as stated by Dimitris et al (2002): Company movement towards customer orientation Adoption of customer retention as focus Provision of value to customer Incorporating technology for effective data and knowledge management According to Swift (2001). middle and lower groups. According to Newell (2000). Older customers show tendency to buy more and be less price sensitive. which have shortened the product life cycle and made it necessary to innovate in order to sustain a level of superior performance. Focus on Customer Retention With the evolution of technologies and the customer. maintaining business advantage is becoming increasing difficult. developing accurate information for customers. 1999). Customer orientation has often been associated with market orientation. CRM increases business opportunities by improving the process of communication with customers. it has become more difficult for businesses to get new customers. (1996) proposed four reasons to outline the greater profitability gained from retention of customers. Upon close analysis. Customer Orientation Customer orientation is basically a business philosophy that defines the ultimate goal of an organisation to be the fulfilment of customer needs for the purpose of maximising business profits. The dissemination of information. and Satisfied customers are a source of profit and revenue generation for the company since they possess the powerful force of word-of-mouth marketing. as well as providing the opportunity to analyse customer behaviour and data in real time (Ryals & Knox. and are the most profitable with the highest levels of loyalty to the organisation. businesses must maintain relationships with the existing customer rather than constantly seek new ones (Hildebrand. 2001). Profits are realised from the customer in each year after acquisition. all form the crux of activities in this process (Hajjat & Mahmood. An organization‟s CRM focus should be in retaining these customers. The change in the outlook of management on the placement of customers has been propelled by accelerating technological developments. as compared to seeking new ones: Acquisition of new customers costs the business in the form of sales and marketing. CRM systems and applications help in operational flexibility. Customers in top group make up 10% of the whole customer-base. Reichheld. the goal of putting customer at the centre of all marketing activities remains the primary goal for both. In the current age of competition. There is a realisation that in order to be more profitable. by . there are three types of customer relationships: the top. 2002).
By adding more value. companies try to improve customer satisfaction so that the bonds between the two entities are strengthened and customer loyalty is gained. CHARACTERISTICS OF CRM CRM has four characteristics (Xu et al. Customer value is defined as the customer‟s overall assessment of the utility of a product/service. Field service: Remote staff can effectively communicate with customer service personnel to meet customers‟ individual expectations. Customer value is a strategic tool in attracting and retaining customers. The expense and effort involved in targeting these customers hinders the effectiveness of servicing existing customers in the top and middle groups. It also helps the organisation in incorporating exemplary customer service. This allows for a better mapping of the customer‟s spending habits and allows the companies to develop their products and marketing scheme accordingly. Middle group customers make up a large majority of the consumer-base.. and are the ones who deliver good profits hold the potential for future growth and loyalty.providing them excellent service. Marketing Automation: CRM provides up-to-date information on consumer trends so that the most effective marketing campaigns can be achieved. Companies can assign each query to the appropriate expert. who can then resolve the issue at the earliest. allowing for a singular view of each customer which contains all contact information and sales history. Using CRM to target the middle group customers effectively will ensure in acquiring a good source of potential growth. and has become one of the most significant factors in the success of both manufacturing businesses and service providers. service instructions can be accessed for a better quality of customer service. Sales-Force Automation: CRM applications effectively manage customer information. 2004). Utilising a knowledge-base. based on the perception of what is received and what is given (Wang et al. 2002): Customer Service and Support: CRM improves the customer retention rate by incorporating a real time monitoring of customer service. based on their location. utilising the organization‟s CRM system. Furthermore. Provision of Customer Value Customer value is an important component of a successful business-customer relationship and the ability of a business to provide superior value to its customers is regarded as successful competitive strategy. The innovation of various technologies offered by CRM systems can be combined to enable companies to address customers‟ individual needs effectively. customer value was defined and understood in terms of product/service quality and low prices. 2004). Delivering superior customer value has become an ongoing concern in building and sustaining competitive advantage (Hansemark & Albinsson. Traditionally. the organization can nominate the correct technician or personnel to a customer.. 2004). Business are continuously searching and exploring different ways to provide customer value (Wang et al. ELEMENTS OF CRM . A CRM strategy can provide a high level of satisfaction by optimizing the business processes and making every interaction more customer-centric. Lower group customers are only marginally profitable.
either redesign or replace or incorporate new processes which will be more effective. Implementing applications like CRM requires a change to the organisational structure and culture. By creating relationships with . In order for CRM to be successful. Technology remains the key enabler to the redesign of business processes. businesses are in a position to assess which of its customers are profitable and which are not. CRM improves marketing tools used by an organization. Chen & Popovich (2003) state “using technology to “optimize interactions” with customers. By ensuring that the system targets customers with high-value propositions that satisfy their needs. companies can create a 360 degree view of customers to learn from past interactions to optimize future ones“.Customer Relationship Management is a combination of people. and not simply developed to be a quick sale. The people component is the most difficult component to manage as users are often reluctant to change. Upon improving its product offerings. processes and technology that combine to understand a company„s customer. which generated enough positive marketing from word of mouth to help establish a significant level of growth in the market. BENEFITS OF CUSTOMER RELATIONSHIP MANAGEMENT The primary benefits of CRM include significant improvement to the marketing techniques. Assessing Customer Profitability: By implementing CRM. The process component of CRM is delicate in nature because inappropriate automation of the CRM system will only speed up the errant process. it is important for better service to be maintained over time. as well as better chances of customer retention and growth in market share for the business. a business gains the ability to retain its customers and establish a sense of loyalty between each other. but rather flow across the various units and functions of the business. CRM initiatives require vision that must be understood by each member in order for the system to work. When applied in CRM. Profitability from fewer customers: The number of customers required in maintaining sales and profitability is lower because of the loyalty of the retained customers. it facilitates the collection and analysis of customer data as well as interprets customer behaviour and proposes models for predictive strategies. companies can save on promotional activities. To realize effective process change. These include: Lower costs of customer acquisition: Utilising the existing customers as the primary marketing tool. CAPITALIZATION ON CRM The benefits of CRM are not limited to any one department of a company. However. companies can gain many benefits from CRM. According to Swift (2001). Firms should make an informed decision of offering customers solutions that are designed to fulfil their needs. This is essential in understanding which group of customers the business should focus on in order to generate more profit. the seamless integration of every aspect of business needs to be established. a company first needs to examine how well existing customer-facing business processes are working and then.
The organization‟s customer retention improved due to their ability to understand ad project what customers might value in the future. Some key attributes of creating good customer relationship are: Giving time for the development of a relationship. and develop a stronger bond with them. Establishing a two-way communication medium. CRM offers the flexibility of fine-tuning the system to be able to respond to the needs of all. Due to the different nature that exists in each relationship. Communication allows the organization to have a better understanding of the consumer. as it allows the business to cater for the expectation that customers will have and incorporate it within the future strategy. the investment and financial company. The company analyzed the method in which clients did business with them and anticipated emerging priorities that could develop. It is due to this reason that businesses continue to invest in CRM.consumers. Price of a product or service is only one of the aspects that could affect the bottom line of consumer‟s decision. 2008). embraces the notion of managing customer value (CRM Magazine. It is essential that every member of an organization understand the customer in order to make consumer loyalty a reality for the business. of doing business with a vendor they may be less likely to stop doing business with them. By utilizing technology to improve data mining and sales processes. Hence. real or perceived. the information was applied to establish marketing strategies that could entice potential customers. CRM RETENTION STRATEGIES Customer retention is important. the decision of engaging with any business comes down to the satisfaction and value that they can receive or expect to receive. through the utilisation of various activities that a company can provide to the customers. and work towards new models of customer relationship. The CRM tools provide businesses to gain further efficiency from their resources. understanding entity. it can be stated that there is value to be added to a business from relationships. The establishment of a communication channel is dependent on the importance that a company places on the relationship it has with its customers CUSTOMER PROFITABILITY . consumers evaluate the current and past performances of the firm. as well as incorporating the expected performance from the future. For customers. This reflects on the ability to offer a medium to listen to suggestions and complaints that a customer may have. because it is cheaper to keep existing customers happy than to attract new ones. If a customer believes there is a benefit. This is why CRM‟s integration with the core business activities is important for an organization. as customer turnover cost can result in an overall loss for the business. having monitored their current behaviour. The quality of products offered by any business is directly linked with the relationships that it has with its customers. which can transform the company into a stronger. For the continuation of any relationship. firms can gain the ability to access improved interactions with their target audience and gage the needs of the customer. Charles Schwab.
Another benefit of a successful CRM implementation is the ability to analyse customer profitability. Another aspect for the organization to consider prior to making any decisions is the future sales that a customer could bring in. This means that even if a current customer is high maintenance for the business. there is a need for a more systematic approach to be adopted when information is collected about the customer. in order to properly represent the customer view. especially if there is a concentrated market. VALUE-ORIENTED MARKETING The crux of value-oriented marketing is not in collecting data about customers through various modes and systems. but in ensuring that the information extracted is of importance. One of the reasons behind this is the variance in expectations that each customer brings to the relationship with the business. Due to the multitude of options that must be considered. customer relationship management systems should be able to assist in determining pending and possible opportunities. the data must be relevant. The concept behind such an analysis is to be a win-win situation for both the customer as well as the organization. The collected data is utilised by an organization to establish the allocation of its resources. as well as relevant to the need of the business. customer service centre calls. and part of a forward-looking strategy to anticipate the customer‟s needs and wants. a customer or client is defined as “the individual or group who are willing to buy products for sustained earnings of a business”. customers who are symbolic to the effectiveness of the business would be given special attention and have stronger relationships with the company. This is a continuous process. This is the term used to define the right customers. in order to be able to calculate the value of the relationship and allow the business to focus on those which are more profitable than others. internet usage. The customer relation process should include methods of determining the cost that each customer brings to an organization. however. Organizations must be able to determine when a relationship is costly. allowing the company to focus on future products and services that are likely to be demanded by the market. it is feasible for the long-term growth of the organization to retain the customer. according to Grönroos (2000:61). the effective . the data from sales calls. Some customers demand more time and services than other customers. For example. as well as determine the best way in which to improve the experience that a customer has with an organization. It is not easy to track the cost of the services an organization performs for customers. Additionally. In this case. as the elimination of transactions which are not feasible or of value to the organization would allow more focus to be made on the ones that do matter. but is likely to generate larger volumes of trade with the organization. it is also important to recognize the opportunities of value. potential customer relations should also be considered. as well as to convert average customers to ones from which the business can derive a profit. The collected information should be detailed and complete. Hence. However. despite the importance that it holds. and all other points of contact can be put together to give the company a “360-degree view”. Meanwhile. CONSUMERS: SELECTION AND POSITIONING According to Peelen (2005:25). For an organization. incorporating a strategy that understands the needs of the customer is important. especially when a customer is prepared to pay extra for services or goods.
and accepts to provide return for the corresponding products and services”. and thereby create a stronger line of loyal clientele‟. This is emphasized by the fact that such strategies help the organization retain quality customers and bring more long-term value to the establishment. service concept. Some of the purposes that a successful CRM program includes are: Improving customer satisfaction Improving customer loyalty Customer-oriented focus on demand Improving sales CUSTOMER SATISFACTION Organizations are required to be more radical with their strategies. Tactics for Improvement The most common cause of annoyance in customers is the time experienced in waiting for service. When considered against the backdrop of an economic downturn. since it is value that creates satisfaction. This relates to the fact that more valuable customers can be enticing to competitors and thus prove harder to retain. as the market becomes ever more aggressive and competitive. it is important to give them some form of special treatment. and hence. Compromising on the quality of service can lead to defection by customers. Single View of the Customer In a balanced service situation.customer is “a group of consumer who agrees to the values of corporate identity. Optimizing ‘exchange of value’ A company‟s knowledge on a customer is the key to optimizing the value of the relationship between the two entities. Businesses should treat their best customers with as much loyalty as they exhibit on the establishment. For organizations who wish to realise the satisfaction of high-value clients. which results in customer loyalty. it is unlikely that customer retention activities will hold no positive result. enterprises need to be able to understand what standard is required by each level of customer. than new ones. Best Customers First Unless an organization is able to differentiate between the values of customers. The aim of CRM is to help organizations to manage their marketing and build up a better relationship with the customer. . the customer with lower expectations will likely end up being happier than those who are more demanding. that will allow their resulting level of acceptance to be higher. Meeting customers‟ value expectations is the key to customer profitability. The equal treatment of customers by companies has needed a change of sorts. this becomes ever more vital to the organization since the loyal customers are more likely to continue their relationship with the business.
since expectations can be managed to effectively identify the right time and channel. Knowing about the customer and their habits helps a business identify the right time and product to ensure that the system produces the results that help the productivity of the business. a business should give due importance to the regular monitoring and refinement of various processes. An important factor that must always be considered for any form of network linkup is security. Timing is everything in an effective CRM program. organizations should take into account the future needs that could develop. the incentives they can be offered in return for loyalty and the performance measures that need to be implemented so that incentives have the right effect. The CRM process is divisible into the following: . by creating an environment that provides a valuable service and embodies a sense of accountability. From determining the target audience. so that the organization can retain optimum performance in all aspects. It is important for a business to show commitment to the customer. but reliant on the integration of various processes. TECHNOLOGY AND PROCESS The success of CRM is not solely on technology. Also. without the need to re-consider price or delivery service. and design CRM systems that are configurable to changing business demands. from developing the strategies and the focus of identifying special attention. all rely on an organization‟s readiness to accept the responsibility to protect its image and bring stability to the overall environment. to understanding the needs. and this can only be achieved if a positive perception is implemented by the business. It is important for the customer to feel like a part of the organization. CRM systems can be used as tools to measure how various facets of a customer‟s interaction with the business and how it affects the business. While technology should be strategic and cost-effective. An organization needs to recognize the unique situation of a customer at any particular time. as that is adamant in respect to protecting the core functionality and the resources of CRM. CUSTOMER LOYALTY Loyalty is used in business to describe the faith that a customer exhibits to a company and its products. The steps taken by any business to achieve customer loyalty can vary depending on the industry it is involved in. This will allow the business to reap optimized value from its customer.The correct targeting of promotions is also another way of ensuring customer satisfaction. it should provide the flexibility and growth options for long-term opportunities of the business. Motivating Loyalty To achieve customer loyalty. meaning that the customer repeatedly returns to do business with the company. Since system customization is a costly exercise. while keeping in-sync with the organization‟s short and longterm goals. a business needs to address the following areas: the key services that of value to their customers.
Implement Strategies: Any strategies designed by the organization should fit within the culture and the operational processes. The perspective in discussion is the building of a common view of the customer from all business channels and sharing the information gathered with relevant functions. As an example. Profile the Market: This refers to the grouping of customers based on their different characteristics. or direct customers in the right direction. Where customers have been classified for a particular level of service. Design Communication Strategy: Communication with clients can take several formats. in order for the firm to allocate different resources to each type of relationship. Instead. the focus should always be on improving the quality of the existing relationships. it is important for the company to assess the effectiveness of the strategy. but instead focus on them as interdependent transactions that create their own dynamic system with time. With new procedures adopted by organizations. The creation of a profile for each customer allows for a systematic flow to be embedded in the CRM process design. The focus of this paper is on the CRM process when it comes to roles that are facing the customer. and manage the relationship. it is essential that staff who deal with customer are well-informed of the segments and the strategy. the strategy should be implemented. this could be in the form of numbering the performance of various aspects of the process. There are four factors that companies should reflect on deeply. The choice depends on the nature of the business and the message being imparted. this would require more organizational entities to remain in the loop. With multiple modes at the disposal of the business. based on various marketing literatures: The building and managing of ongoing customer relationships remains the essence of the marketing concept. it is imperative that the information be managed in a systematic and coordinated manner so that the organization‟s relationship with the customer can be managed efficiently. a firm will interact with customers. so they can be ready to pass the information to customers. Businesses should not view these or measure them as independent incidents. mail or electronic. it is essential that the value of every relationship be independently assessed. The concept behind relationships is that they evolve with distinct phases. in order for the strategy to be effective. . Segmentation of customers can be done on the interaction that they have at the time of sales or the way they wish to be informed of upcoming products or events. but the mode could be print. This data helps in analysing the changes that should be adopted for future strategies. Once this fit is determined. At any time. As a CRM strategy. CRM systems allow companies to manage each stage of the relationship in a systematic and proactive manner. and any new ones that may develop with time. At each stage of an organizational process. In terms of any campaigns. the strategy could be linked to the sending out of direct mails that have been prepared for introduction of a new product. But organizations should not look forward to increasing the relationships on a quantity scale. Evaluate Results: At the end of the implementation. It is important that the firm show a difference in each interaction and manage the relationships in a variety of ways. it is important that the right one be selected in order to have a stronger and positive response from the consumer. by both the customer as well as an internal individual of the organization.
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