Thus, CRM requires organizational and business level approaches which are customer centric to doing business rather than a simple marketing strategy.Customer Relationship Management (CRM) is the approach of identifying, establishing, maintaining, and enhancing lasting relationships with customers,can also be classify as the formation of bonds between a company and its customers.Furthermore, also tell about why crm is needed: change in customers, change in market place, change in technology, globalisation, deregulation, advances in information technology (IT).
In addition to trust and value , salespeople must : Understand customer needs and problems; Meet their commitments; Provide superior after sales support; Make sure that the customer is always told the truth (must be honest); and Have a passionate interest in establishing and retaining a long- term relationship (e.g., have long-term perspective).The trust goal: is to establish a profitable, long-term, one-to-one relationship with customers; understanding their needs, preferences and expectations.The value is to be customer oriented view,mass customization, one-to-one marketing,customer-supplier relationship and relational approach.
Component of Customer Relationship Management (CRM) involves three (3) essential elements.
Stages in the development of a Customer Relationship The Pre-relationship Stage The event that triggers a buyer to seek a new business partner. The Early Stage Experience is accumulated between the buyer and seller although a great degree of uncertainty and distance exists. The Development Stage Increased levels of transactions lead to a higher degree of commitment and the distance is reduced to a social exchange. The Long-term Stage Characterized by the companies’ mutual importance to each other. The Final Stage The interaction between the companies becomes institutionalized.
Stages in the Development of a Key-Account Relationship Degree of involvement High Low Nature of customer relationship Transactional Collaborative Pre-KAM Early-KAM Mid-KAM Partnership Synergistic KAM (Millman & Wilson, 1995)
Relationship Life Cycle Model High cooperation Low competition Low cooperation High competition Time Pre- relationship stage Development stage Maturity stage Decline stage (Wilkinson and Young, 1994)
Customer Identification ;In the product-oriented world, companies developed products and services and expected customers to buy them.Organizations are increasingly developing products and services, and even new channels, based on customer needs and service expectations. Most organizations today are not able to cost-effectively customize products for individual customers. However, products, services, channels and media can be customized based on the needs of quantitative customer segments.Customer Differentiation ;Segmentation to identify logical unique groups of customers that tend to look alike and behave in a similar fashion. Identification of actionable segments is a practical place to start. Customer valuation to understand profitability, as well as lifetime value or long-term potential. Customer Interaction; Interaction is a critical component of a successful CRM initiative. It is important to remember that interaction does not 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. To foster relationships, organizations need to insure that: All areas of the organization have easy access to relevant, actionable customer information.Customization/ Personalization; The more information about customers, the easier it is to pinpoint those that are producing the greatest value for the organization. Successful customer retention is based very simply on the organization's ability to constantly deliver on three principles: Maintain interaction; never stop listening. Continue to deliver on the customer's definition of value. Also remember that customers change as they move through differing life stages; be alert for the changes and be prepared to modify the service and value proposition as they change
Traditional (mass) marketing doesn’t need to use information technologies extensively because there is no need to distinguish, differentiate, interact with, and customize for individual customer needs. Although some argue that IT has a small role in CRM, each of the four key CRM tasks depends heavily on information technologies and systems.
Simplified Goal-Setting;By pulling all the data together into one place, CRMs make it easy to track performance both within and across the team. CRMs can also bring all this information together into reports that help with forecasting. Having this level of analysis available makes setting the next period's goals much easier... and makes it more likely that these goals will align with reality. A CRM automates a lot of the usual time-devouring tasks, giving salespeople more time to do what they are actually paid to do: namely, sell to prospects. More time spent in front of potential customers (instead of shuffling paper) means more sales.
This is the customer centric strategy of the decade, because boosting customer loyalty is a big plus to the organization.
It is an ongoing business process and will create sustainable competitive advantage. The customer experience needs to be consistently enhanced. CRM can be enabled by technology, but this alone will not deliver business benefits – Change Management is vital
1. Customer Retention
Stephen A Oyewole
Prescott Valley, Arizona.
2. Presentation Outline
Introduction and definition of Customer Relationship
Determinants of Customer Relationship Management
Components of Customer Relationship Management
Customer Relationship Management Cycle
Customer Relationship Management Implementation
Benefits of Customer Relationship Management
Customer Relationship Management and Customer Loyalty
3. Introduction and definition of CRM
CRM is an abbreviation on Customer Relationship Management not
Customer Relationship Marketing. Management is a broader concept than
marketing because it covers marketing management, human resource
management, manufacturing management, service management, sales
management and research and development management .
Customer Relationship Management (CRM) is an integrated cross functional
focus on improving customer retention and profitability for the company.
Other definitions could be:
Process of creating and maintaining relationship with business
customers or consumers. (Payne & Frow, 2005)
A holistic process of identification, attracting, differentiating and
retaining customers. (Plakoyiannaki & Tzokas, 2001)
Integrating the firm’s value chain to create enhanced customer value
at every step.
4. Determinants of Customer Relationship Management
The willingness to rely on the ability, integrity and
motivation of one company to serve the needs of the
other company as agreed upon implicitly and
explicitly(Kalaignanam & Varadarajan, 2012).
The ability of selling organization to satisfy the needs
of the customer at a comparatively lower cost or higher
benefit than offered by competitors and measured in
monetary, temporal, functional and psychological
5. Component of CRM
The customer is the only source of the company’s
present profit and the future growth. However, a good
customer, who provides more profit with less resources
is always scarce because customers are knowledgeable
and the competition is fierce.
“ Business are not to paid to reform customers they are paid
to satisfy customers” – Peter Ducker
The relationship between a company and its customers
involves continuous bi-directional communication
and interaction (Alvarez, Casielles & Martin, 2011).
The relationship can be short term or long
term, continuous or discrete, and repeating or one
Relationship can be attitudinal or behavioral . Even
though customers have a positive attitude towards
company and its products their buying behavior is highly
Customer relationship management is not an activity
only within a marketing department.
Rather it involves continuous corporate change in
culture and processes .
The customer information collected is transformed
into corporate knowledge that lead to activities that
take advantage of the information and of market
CRM required a comprehensive change in the
organization and its people.
9. Customer Relationship Management Cycle
To achieve CRM Goals Four basic tasks are required to achieve the basic goals of
CRM. (Chen & Popovich, 2003; Bhattacharya & Sen, 2003).
To serve or provide value to the customer ,the company must know or identify
the customer through marketing channels, transactions , and interactions over
Each customer has their own lifetime value from the company’s point of view
and each customer imposes unique demands and requirements for the
Customer demands change over time. So keeping track of customer behavior &
needs is an important task of CRM.
“Treat each customer uniquely” is the motto of the entire CRM process .
10. CRM Implementation
The business drivers
Competition for customer is intense. From a purely economic point of
view, firms learned that it is less costly to retain a customer than to find
a new one.
By Pareto’s principle it is assumed that 20% of a company’s
customers generate 80% of its profits.
In industrial sales, it takes an average of 8 to 10 physical calls in
person to sell a new customer, 2 to 3 calls to sell an existing
It is 5 to 10 times more expensive to acquire a new customer than
obtain repeat business from an existing customer.
A typical dissatisfied customer tells 8 to 10 people about his or
her experience. A 5% increase in retaining existing customers
translates into 25% or more increase in profitability
11. Benefits of Customer Relationship Management
Customer Relationship Management It is a business strategy that applies to
almost every organization; therefore almost all organizations stand to gain
from its use (Homburg, Droll & Totzek, 2008).
Customers are motivated to return again and again as they receive good
customer service and continue to do business.
CRM enables a company to target their audience more precisely and gain
customer retention, all at a lesser cost.
CRM delivers company-wide access to customer information. Builds customer
loyalty and decreases customer loss.
It enables an organization to create detailed profiles such as customer
CRM gains the trust of customers by meeting their needs in a more
Companies opting for CRM find it easy to identify new selling opportunities.
12. CRM Enhancing Customer Loyalty
Customer retention is imminently important for organization success as the cost of acquiring a new
customer is greater than holding onto an old customer. – CRM achieves customer loyalty with ease.
TYPES OF CUSTOMER RETENTION PROGRAMS :
Benefits of customer retention programs :
They permits the collation of important customer data.
They allow the usage of this data in the understanding and dealing of customers.
The data collected is often used while making valuable customer decisions.
They assist in making the customer feel special.
They boost customer service and thereby increases customer loyalty.
Pitfalls of customer retention programs :
The main inhibition in this area is the cost factor. Customer retention program often
involve huge costs to the organization and most firms are reluctant to embark on this. In
this respect it is important to focus on the possible returns rather than the cost involved
as customer retention is a direct simulator for profitability and growth.
CRM is a business philosophy based on trust and value
The core function of CRM is the value creation process
Customer relationships develop over time
The role of global salespeople in the process is that of both
relationship builders and relationship promoters
CRM requires a cultural change with organizations.
The basic premise of CRM is to offer superior value to
customers in an effort to turn prospects into
customers, customers into loyal customers, and loyal
customers into partners.
It is essential to bear in mind that :
“If you are not listening to your customers, your competitors will.”
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