Customer Relationship Management

Significance of Customer Relationship Management :

The approaches in marketing functions are constantly changing in tune with the changing challenges that are faced at the market fronts . Today, marketers consider retaining of customers as a much more challenging job than acquiring customers in the context of growing competitive forces. Thus, the traditional transactional approach of marketing became insufficient to achieve the marketing goals . This scenario necessitated the emergence of a new approach namely Relationship Marketing .

The relationship marketing approach differs from the traditional transactional approach in the following ways :
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 centers around tentative adjustment process as regards performing marketing functions.Customers are viewed as outsiders to the business. Under transactional approach customers 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 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 centers around developing hard core loyal customers with the idea of retaining them forever. A high degree of customer contact, commitment and services are maintained.

Customer Relationship Management Defined : 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.

The relationship marketing approach has great significance from the organizations point of view due to the following :
1. Reduction in customer recruitment cost. 2. Generation of more and more loyal customers. 3. Expansion of customer base. 4. Reduction in advertisement and other sales promotion expenses. 5. Benefiting customer selectivity approach. 6. Increase in the number of profitable customers.

7. Easy introduction of new products.

8. Easy business expansion possibilities. 9. Increase in customer partnering . Etc.

Why organizations lose their Customers : The possible reasons are as follows : Price Related Reasons : Customers try to match price they pay for acquiring a brand and the value the brand could generate . If a customer perceives a mismatch between the price and the value, he would opt for a competitors brand. Also, if the price of a brand for any reason goes beyond his reach, he would switch over to a low priced brand . Thus, the role of price in customer retention is very significant. Product Related Reasons : In view of technological advancement , the new brand which makes market entry would be capable of offering better performance as compared to the already existing brand . This would induce the customers to make brand switch over.

Service Related Reasons : The customers contribution is not only on the brand , but also on the accompanying services offered at three different stages e.g.presales , during sales and after sales . Any dissatisfaction as regards to service would cause the customer to move away from the brand.
Benefit Related Reasons : The customers may be attracted by various augmented benefits offered by the competitors . Such benefits may be more appealing and will induce customers towards brand changes. Competitor related reasons : Technological advancement , attractive offers , value added services , etc. offered by competitors would also draw the attention and induce customers towards brand switching.

Personal Reasons : On the personal front , a customer would become a brand defector due to the following reasons : 1. Moved away from the market area where brand is sold.

2. Role changes in life cycle , consequently leading to changes in brand preference.

3. Anger,disgust,distress developed within the process of product . 4. Sentimental reasons. 5. Influence of other members of the family or friends.

An organizations strategies towards developing and maintaining sustainable relationship differ from one organization to another depending on certain factors. These include nature of business, its size,its market share , nature of product type, volume of sales , geographic concentration , socio economic status and life style of the customers concerned, competitors strength, and so on.

CRM Process :

CRM process is defined as any group of actions that are instrumental in the achievement of the output of an operation system , in accordance with a specified measure of effectiveness.

The final objective of the CRM process is to originate a powerful new tool for customer retention . The CRM implementation and success rate purely depend upon the process, which includes the future , revenue , customer value , customer retention , customer acquisition and profitability.

Benefits of a CRM Process : Ability to retain loyal and profitable customers and channels for rapid growth of the business project . Acquiring the right customers , based on known characteristics , which drives growth and increased profit margins.

Increasing individual customer margins , while offering the right products at the right time.

Four Cs (elements) of CRM Process :

The appropriate approach for the CRM process involve : Correlate A series of transactions and interaction that make up a dialogue between customer/channel/end user and an organization . This is the data that is collected from all contact points and communications, with outside points of contact. Combine - The mapping and management of interaction points between a customer/channel/end user and an organization. Cognize - The insight gained through capture and analysis of detailed information is to create continuous learning(about customer,products,channels , market, and competitor) from the data warehouse and knowledge base that is created , interrogated and analyzed.

Connect : The application of insight to create relevant interaction or communication with consumers, customers , channels , suppliers , and partners that build value relationship.

COGNIZE

CONNECT

COMBINE

CORRELATE

These four activities help to achieve the extended CRM process.

The basic structure of the CRM organization should align around the key communication process . In order to recognize the right customer, relate the right offer, and schedule the interaction or communication of the offer at the right time , with the connection across the right channel . People will have to share a process and activate their skills to complete the activities and tasks required for success.

CRM Process for Marketing Organization :

The organization structure of a marketing organization would assume the following style :

Marketing Analyst Manager Segment

Campaign Manager

Channel Manager

Relationship Manager

CRM Project Manager CRM Technical Consultant

Key Requirements for CRM : Some of the functional requirements for CRM solutions are as follows : 1. Business Intelligence and analytical capabilities. 2. Unified channels of customer interaction. 3. Web-based functionality support. 4. Centralized repository for customer information. 5. Integrated workflow. 6. Integration with ERP applications.

7. Optimization of interactive relationships with customers.

e-CRM
e-CRM provides to companies a means to conduct interactive,personalized and relevant communication with customers across both electronic and traditional channels.It utilizes a complete view of the customer to make decisions about messaging , offers and channel delivery.It synchronizes communications across disjoint customer-facing systems.It also focuses on understanding how the economics of customer relationships affect the business. e-CRM is the customer facing Internet portion of CRM.It includes capabilities like self-service knowledge bases , automated email response , personalization of Web content,pricing and so on.It gives internet users the ability to carry ob business with users through their preferred communication channels.