CUSTOMER RELATIONSHIP MANAGEMENT

CUSTOMER RELATIONSHIP MANAGEMENT

CUSTOMER RELATIONSHIP MANAGEMENT

Introduction:

In today’s competitive markets, customers are demanding an altogether different kind of relationship with producers and suppliers than the customers of transactional marketing era. The customers are more value conscious and if they do not find value for their money, they have no qualms in shifting their loyalties; undoubtedly this is the golden era for the customers, but for companies, survival has never been so easy. The companies have to strive hard and should win customer’s confidence which is possible only when companies keep delivering value to customers.             As customers consistently are in search of value, they are also interested in helping companies create value for which the companies need information. The new age customers also want to share problems they are facing, and inform companies the kind of product or service they are looking for. They also want companies to share every bit of information they have, which helps in developing a close bond between the customer and the company.

Developing, maintaining, and sustaining the close bond between the customer and company is known as customer relationship. Companies across the horizon, to enrich the bond of customer relationship, are using the new database technologies that enable the management to know all about customers and offer customers a platform to interact with the company. Today, customers and companies share information, which has helped the company to revive their relationship with customers and manage the customer relationship.

Evolution of CRM:

The focus of transactional marketing approach is on individual transaction and does not concern continuous relationship with customers. The framework of transactional marketing does not contain a strategic long-term perspective. It centres around tentative adjustment process as regards performing marketing functions. Customers are viewed as outsiders to the business.

            Under transactional approach customer’s expectations, satisfaction, multiple influences on their decision – making process etc., are not given due significance. Very little attention is paid to customer services and customer commitments. The thrust of transactional marketing is on gaining more and more new customers rather than retaining existing customers.

In contrast to the transactional marketing approach, the relationship marketing focuses on continuous multiple transactions rather than isolated individual transactions. The relationship marketing approach considers customers as insiders to the business and aims to build a long-term and never-ending relationship with them. The focus of relationship marketing approach centres around developing hard core loyal customers with the idea of retaining them forever. A high degree of customer contact, commitment and services are maintained.

The relationship marketing approach has gradually taken the shape of Customer Relationship Management. Relationship marketing has a narrow focus on the customers and only on the marketing functions of the organization concerned. On the other hand, Customer Relationship Management focuses more widely on customers and on the entire functions connected with value creation and delivery chain of the organization concerned. Organizations have preferred the usage of the term Customer Relationship Management rather than relationship marketing.

The Customer Relationship Management in general is operationally defined by authors as “a management process of acquiring customers by understanding their requirements, retaining customers by fulfilling their requirements more than their expectations and attracting new customers through customer specific strategic marketing approaches. The process invites total commitment on the part of the entire organization in evolving and implementing relationship strategies that would be rewarding to all concerned.”

CRM BUSINESS CYCLE:  The CRM Business Cycle are:

Acquisition and Retaining Understand and Differentiate Develop and Customize Interact and Deliver

Acquisition and Retaining

            Acquisition is a vital stage in building customer relationship.  For the purpose of customer acquisition, an organization is likely to focus its attention the suspects, enquiries, lapsed customers, former customers, competitor’s customers’ referrals, and the existing buyers.  From these the organizations need to acquire customers and prospective customers and retain valuable customers.

Understand and Differentiate

            Organizations cannot have a relationship with customers unless they understand them…what they value, what types of service are important to them, how and when they like to interact and what they want to buy.  True understanding is based on a combination of detailed analysis and interaction. To understand the customers the various activities required are:

Profiling to understand demographics, purchase patterns and channel preference. Segmentation to identify logical unique groups of customers that tend to look alike and behave in a similar fashion.  While the promise of one-one marketing sounds good, we have not seen many organizations that have mastered the art of treating each customer uniquely.  Identification of actionable segments is a practical place to start. Primary research to capture needs and attitudes. Customer valuation to understand profitability, as well as lifetime value or long-term potential.  Value may also be based on the customer’s ability or inclination to refer other profitable customers.

            Customer need to see that the company is tailoring service and communications based on what they have learnt independently and on what the customers have told to them.

Develop and Customize

            In the product world of yesterday, companies developed products and services and expected customers to buy them.  In a customer-focused world, product and channel development has to follow the customer’s lead.  Organizations are increasingly developing products and services and even new channels based on customer needs and service expectations.

Interact and Deliver

            Interaction is also a critical component of a successful CRM initiative.  It is important to remember that interaction doesn’t just occur through marketing and sales channels and media; customers interact in many different ways with many different areas of the organization, including distribution and shipping, customer service and online.

            With access to information and appropriate training, organizations will be prepared to steadily increase the value they deliver to customers.

CRM Technology

            The application of technology is the most exciting, fastest growing and changing the way customers get information about products and services.  Technology includes all the equipment, software, and communication links that organizations use to enable or improve their processes.  The mostly used tools are

Sales Force Automation

            These systems help in automating and optimizing sales processes to shorten the sales cycle and increases sales productivity.  They enable the company to track and manage all qualified leads, contacts and opportunities throughout the sales cycle including customer support.  They improve the effectiveness of marketing communications programmes for generating quality leads as well as greater accuracy in sales forecasting.  The internet can be used by the company in imparting proper training to its sales force.  In depth product information, specialized databases of solutions, sales force support queries, and a set of internal information on the internet can improve the productivity of the sales force.

Call Centers

            Call Center helps in automating the operations of inbound and outbound calls generated between company and its customers.  These solutions integrate the voice switch of automated telephone systems with an agent host software allowing for automatic call routing to agents, auto display of relevant customer data, predictive dialing, self-service Interactive Voice Response systems, etc.  These Systems are useful in high volume segments like banking, telecom and hospitality industries.  Today, more innovative channels of interacting with customers are emerging as a result of new technology, such as global telephone based call centers and the internet.  Companies are now focusing to offer solutions that leverage the internet in building comprehensive CRM systems allowing them to handle customer interactions in all forms.

Data Warehousing

            A data warehouse is an implementation of an informational database used to store shareable data that originates in an operational database-of-record and in external market data sources.  It is typically a subject database that allows users to tap into a company’s vast store of operational data to track and respond to business trends and facilitates forecasting and planning efforts.

Data Mining and OLAP

            Data mining involves specialized software tools that allow users to sift through large amounts of data to uncover data content relationships and build models to predict customer behavior.  Data mining uses well-established statistical and machine learning techniques to build models that predict customer behavior.

            OLAP (Online Analytical Processing), also known as multi-dimensional data analysis, offers advanced capabilities in querying and analyzing the information in a data warehouse.  In some CRM initiatives, OLAP plays a major role in the secondary analysis that takes place after initial customer segmentation has occurred. For example, in CRM – based campaign management systems, OLAP is an excellent tool for analyzing the success or failure of the promotional campaigns.

Decision Support and Reporting Tools

            Web enabled reporting tools and executive information systems are used to deploy the business information that has been discovered.  This enhanced customer knowledge is distributed to executive decision-makers as well as to the operational customer contact points.  Applications equipped with some of the same sophisticated modeling routines developed in the data-mining phase are applied to individual contacts in real time.

Electronic Point of Sale (EPOS)

            The main benefit of EPOS and retail scanner systems is the amount of timely and accurate information they deliver.  Advances in the technology have significantly aided the scope for data analysis. In addition to the original scanner-related data on sales rate, stock level, stock turn, price and margin, retailers now have information about the demographics, socio- economic and lifestyle characteristics of consumers.

Benefits of CRM:

The following are the befits of customer relationship management

Generation of more and more loyal customers. Expansion of customer base. Reduction in advertisement and other sales promotional expenses. Benefiting customer selectivity approach. Increase in the number of profitable customers. Easy introduction of new products. Easy business expansion possibilities. Increase in customer partnering, etc.

      Apart from the above mentioned business benefits, the customers are also benefited in terms of improved service quality, personalized care, reduction of customer stress, increased value of money, customer empowerment.

Conclusion:

      In today’s highly competitive business world, CRM is becoming the ultimate solution for both, customers as well as organizations. A good CRM system may adopt many tools to enable the various processes, viz., marketing campaign building, sales tracking, incentive compensation and customer delivery. Each of these processes requires number of programs or technologies to provide a solution. Companies need to develop a consistent scalable technology platform that is supportable across delivery channels, and management must train people at all levels of the organization to understand the new technologies and incorporate a customer-centric approach to every customer’s interactions.

REFERENCES

Greenberg -  CRM at the Speed of Light-TataMcGraw-Hill Publishing Company Ltd.,New Delhi. Peeru Mohamed H ; Sagadevan A – Customer Relationship Management – A Step by Step Approach, Vikas Publishing House Pvt. Ltd., New Delhi. en.wikipedia.org/wiki/Customer_Relationship_Management – 47k www.crminfoline.com/ – 18k