Customer relationship management


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Stephen A Oyewole
Northcentral University
Prescott Valley, Arizona

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  • This module will cover 7 major topics:
  • 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
  • Customer relationship management

    1. 1. Customer Retention Stephen A Oyewole NORTHCENTRAL UNIVERSITY Prescott Valley, Arizona.
    2. 2. Presentation Outline  Introduction and definition of Customer Relationship         Management 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 Conclusion Resources
    3. 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. 4. Determinants of Customer Relationship Management  Trust 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).  Value 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 terms.
    5. 5. Component of CRM Customer CRM Relationship Management
    6. 6. Customer  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
    7. 7. Relationship  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 time.  Relationship can be attitudinal or behavioral . Even though customers have a positive attitude towards company and its products their buying behavior is highly situational.
    8. 8. Management  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 opportunities.  CRM required a comprehensive change in the organization and its people.
    9. 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). Customer Identification  To serve or provide value to the customer ,the company must know or identify the customer through marketing channels, transactions , and interactions over time. Customer Differentiation  Each customer has their own lifetime value from the company’s point of view and each customer imposes unique demands and requirements for the company. Customer Interaction  Customer demands change over time. So keeping track of customer behavior & needs is an important task of CRM. Customization/ Personalization  “Treat each customer uniquely” is the motto of the entire CRM process .
    10. 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 customer.  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. 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 likes/dislikes etc.  CRM gains the trust of customers by meeting their needs in a more personalized way.  Companies opting for CRM find it easy to identify new selling opportunities.
    12. 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 :  Discount Programs  Card Programs  Loyalty 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.
    13. 13. Conclusion 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.”
    14. 14. References Alvarez, L. Casielles, R. and Martin, A. (2011). Analysis of the role of complaint management in the context of relationship marketing. Journal of Marketing Management, 27 (1-2), 143-164 . Retrieved from Bhattacharya, C. and Sen, S. (2003). Consumer-company identification: A framework for understanding consumers’ relationships with companies. Journal of Marketing 67 (2), 76-88. Retrieved from Chen, I. and Popovich, K. (2003). Understanding customer relationship management (CRM): People, process and technology, Business Process Management Journal, 9 (5), 672 – 688. Retrieved from Drucker, P. (2001).Management Challenges for the 21st Century. Harper Business, New York.
    15. 15. References Homburg, C. Droll, M. and Totzek, D. (2008). Customer prioritization: Does it pay off, and how should it be implemented? Journal of Marketing 72 (5), 110-130. Retrieved from Kalaignanam, K. and Varadarajan, R. (2012). Offshore outsourcing of customer relationship management: conceptual model and propositions. Journal of the Academy of Marketing Science 40 (2), 347363. Retrieved from Millman, T. Wilson, K.(1995). From key account selling to key account management, Journal of Marketing Practice: Applied Marketing Science, 1 (1), 9 – 21
    16. 16. References Payne, A. and Frow, P. (2005). A strategic framework for customer relationship management. Journal of Marketing, 69 167-176. Retrieved from Plakoyiannaki, E. and N. Tzokas (2001). Customer Relationship Management: a Capability Portfolio Perspective, Conference Proceedings of the European Marketing Academy Conference (EMAC), Norwegian School of Economics and Business Administration, Bergen, Norway. Wilkinson, I. and Young, L. (1994). Business dancing: The nature and role of inter firm relations in business strategy. Asia-Australia Marketing Journal, 2(1), 67– 79. Retrieved from