Customer Relationship Management
As the world has became more dynamic with the passage of time and people are looking for
more comfort and customization of facilities in their lives so is true with the marketing. The
traditional marketing has also transformed itself to the new highest and that is CRM (Customer
Relationship Management). The reason behind all this is the stiffer competition in the business
world along with changed approach of the people towards life, people want to be valued and
Difference between Traditional Marketing and CRM
Following are some of the differences between Traditional Marketing Concept and Modern
Customer Relationship Management:
Customer Relationship Management
Expand customer base, increase Establish a profitable, long-term, one-to-one
relationship with customers
Mass customization, one-to-one marketing
Standardization of customer needs
Customization, preferences, expectations
So based on all the above difference between traditional Marketing and Customer relationship
Management the gurus of marketing define the customer Relationship Management as follows:
“The creation, development and enhancement of individualized customer relationships by
carefully targeting customers resulting in maximizing their total customer life-time value”
In other words it may be said that:
“The process of Identifcation, establishment, maintainence, and enhancment of lasting
relationships with customers by corporations is Customer Relationsghip Management”
(Kristin Anderson, 2002)
Following diagram shows that how the data and information follows in customer relationship
Purpose of CRM (Customer Relationship Management)
The very first focal point of CRM is value creation for the customer and the company over the
longer span of time. The base line is that when customers value the service that they receive from
suppliers, they are less likely to look to alternative suppliers for the satisfaction of their needs
subjected to if they really feel pampered and being taken good care. Customer Relationship
Management is a way of gaining Competitive Advantage for the business and organizations over
competitors that are in the similar line of business. (Dyché, 2001)
Why CRM is important?
Since 1980’s there was a rapid shifts in business which changed customer power due to the
advancement in technology and productions processes supply started exceeding demand for most
of the products which gave the customer choice to choose among sellers and so sellers had little
pricing power in such situation the only protection available to suppliers was to build a lasting
relationship with their customers. Achieving this objective was not easy without CRM.
Today businesses create and deliver multi-product offerings by different kinds of networks,
alliances and partnerships to compete in the market. Retaining and building relationships with
customers is the essence of corporate performance along with other value-adding allies. The
adoption of C.R.M. is being fuelled by recognition that long-term relationships with customers
are one of the most important assets of an organization. (Why Infosys global sales force get best
salary deal, 2013)
Information Technology and CRM
The involvement of information technology has entirely transformed the way of doing business
the rational commerce has been changed to E-commerce and so the CRM is not possible without
the help of I.T. Companies Use the I.T in the following way for their CRM:
Phone calls, emails, text messages services
The companies who have access to customers contact details along with their service or purchase
preferences use these tools like calls, emails and sms to alert customers to new, similar or
alternative services or products:
For example all the commercial banks pursue their accounts holders for other financial products
which they offer like Credit Cards, Auto Finance and Mortgage finance. They get the data from
their database and their sales teams call directly to the people.
A Cookie is a parcel of text sent by a server to a web browser and then sent back unchanged by
and maintaining specific information about users, such as site preferences and the contents of
their electronic shopping carts.
For example each time when you access the YouTube it will show you some recommended
videos, these videos are recommended based on your previous activity and search on YouTube.
A loyalty card is used as tool to persuade the customers for the repeat purchase. On the other
hand a retailer loyalty card is source of gathering data about customers which in turn leads to
customer comprehension and cost insights (e.g. customer retention rates at different spending
levels, response rates to offers, and new customer conversion rates) which enables the business
to take appropriate marketing action and follow-up analysis.
For Example the Loyalty Cards Issued by Carrefour by the name of “My Club” and “Shukran
Card” issued by Max Fashion, Splash and Center-point.
Customer relationship Management is not just limited to data mining and use of high tech tools
it may also be carried out in face-to-face interactions without the use of technology. Staff
members often remember the faces/names and favorite services/products of regular customers
and use this information to create a customized service for them.
For example, in a spa the crew members often know the customers who are regular and they
also know their favorite treatments likings and disliking. However face-to-face CRM could
prove less effective and possible when organizations have a large number of customers like
Hypermarkets (e.g LULU) and Fast Food outlets (e.g KFC) as it would be more difficult to
remember details about each of them.
Benefits of CRM
Reduced costs, as the right things are being done
Increased customer satisfaction
Ensuring that the focus of the organization and its external growth
Increased access to a source of Information about market and competitors
Highlighting operational processes long term profitability and sustainability
Dyché, J. (2001). The CRM Handbook. London: McGrawHill.
Kristin Anderson, C. K. (2002). Customer Relationship Management. McGrawhill.
Why Infosys global sales force get best salary deal. (2013). The Economic Times .