CUSTOMER RELATIONSHIP MANAGEMENT: THE WINNING STRATEGY IN MODERN MARKET ERA

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1 CUSTOMER RELATIONSHIP MANAGEMENT: THE WINNING STRATEGY IN MODERN MARKET ERA Ms. Ritika Assistant Professor in Management Pyramid College of Business and Technology, Phagwara (India) ABSTRACT Customer relationship management (CRM) is a combination of people, processes and technology that seeks to understand a company s customers. It is an integrated approach to managing relationships by focusing on customer retention and relationship development. CRM has evolved from advances in information technology and organizational changes in customer-centric processes. Companies that successfully implement CRM will reap the rewards in customer loyalty and long run profitability. Although a large portion of CRM is technology, viewing CRM as a technology-only solution is likely to fail. Managing a successful CRM implementation requires an integrated and balanced approach to technology, process, and people. The essence of the information technology revolution and, in particular, the World Wide Web is the opportunity to build better relationships with customers than has been previously possible in the offline world. By combining the abilities to respond directly to customer requests and to provide the customer with a highly interactive, customized experience, companies have a greater ability today to establish, nurture, and sustain long-term customer relationships than ever before. The ultimate goal is to transform these relationships into greater profitability by increasing repeat purchase rates and reducing customer acquisition costs. Indeed, this revolution in customer relationship management or CRM as it is called has been referred to as the new mantra of marketing. The need to better understand customer behavior and focus on those customers who can deliver long-term profits has changed how marketers view the world. Keywords : Relationship Development, Technology, Profitability, Process, People. I INTRODUCTION In the mid-twentieth century, mass production techniques and mass marketing changed the competitive landscape by increasing product availability for consumers. However, the purchasing process that allowed the shopkeeper and customer to spend quality time getting to know each other was also fundamentally changed. Customers lost their uniqueness, as they became an account number and shopkeepers lost track of their customers individual needs as the market became full of product and service options. Many companies today are racing to re-establish their connections to new as well as existing customers to boost long-term customer loyalty. Some companies are competing effectively and winning this race through the implementation of 221 P a g e

2 relationship marketing principles using strategic and technology-based customer relationship management (CRM) applications. Customer Relationship Management (CRM) can be understood as a revolving process during which companies interact with their customers, thereby generating, aggregating, and analyzing customer data, and employing the results for service and marketing activities. The motivation for companies to manage their customer relationships is to increase profitability by concentrating on the economically valuable customers, thus increasing revenue ( share of wallet ) from them, while possibly de-marketing and discontinuing the business relationship with less valuable customer. II.OBJECTIVE OF STUDY 1. To study the relationship of various components of CRM and their affect on business. 2. To understand the various principles of CRM for its effective functioning 3. To evaluate the benefits of Using CRM tools. III. RESEARCH METHODOLOGY This paper is concerned with the effectiveness of CRM tools in changing market scenario. The paper fulfills the need of students, academician and industries person in understanding the relevance of making a sound relationship with customers in order to increase profitability. The technique used in paper is descriptive in nature and is based on the secondary data collected from peer reviewed journals, website of companies implementing CRM techniques. IV.COMPONENTS OF CRM CRM is a business strategy that goes beyond increasing transaction volume. Its objectives are to increase profitability, revenue, and customer satisfaction. To achieve CRM, a companywide set of tools, technologies, and procedures promote the relationship with the customer to increase sales. CRM consists of three components: Customer, Relationship, and Management CRM tries to achieve a single integrated view of customers and a customer centric Approach Customer: The customer is the only source of the company s present profit and future growth. However, a good customer, who provides more profit with less resource, is always scarce because customers are knowledgeable and the competition is fierce. Sometimes it is difficult to distinguish who is the real customer because the buying decision is frequently a collaborative activity among participants of the decision-making process. Information Technologies can provide the 222 P a g e

3 abilities to distinguish and manage customers. CRM can be thought of as a marketing approach that is based on customer information. Relationship: The relationship between a company and its customers involves continuous bi-directional communication and interaction. The relationship can be short-term or long-term, continuous or discrete, and repeating or one-time. Relationship can be attitudinal or behavioural. Even though customers have a positive attitude towards the company and its products, their buying behaviour is highly situational For example, the buying pattern for airline tickets depends on whether a person buys the ticket for their family vacation or a business trip. CRM involves managing this relationship so it is profitable and mutually beneficial. Management: CRM 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 leads to activities that take advantage of the information and of market opportunities. CRM required a comprehensive change in the organization and its people. V.CRM EVOLUTION Customer relationship management itself is not a new concept but is now practical due to recent advances in enterprise software technology. An outgrowth of sales force automation (SFA) tools, CRM is often referred to in the literature as one-to-one marketing. SFA software automates routine tasks such as tracking customer contacts and forecasting. The goal of SFA is to allow the sales force to concentrate more on selling and less on administrative tasks. It should be noted, however, that CRM also has its roots in relationship marketing which is aimed at improving long run profitability by shifting from transaction-based marketing, with its emphasis on winning new customers, to customer retention through effective management of customer relationships. Thus, CRM is a more complex and sophisticated application that mines customer data that has been pulled from all customer touch points, creating a single and comprehensive view of a customer while uncovering profiles of key 223 P a g e

4 customers and predicting their purchasing patterns. Technology that tracks and analyzes customer behaviour allows companies to easily identify the best customers and focus marketing efforts and reward those who are likely to buy often. Acquiring a better understanding of existing customers allows companies to interact, respond, and communicate more effectively to significantly improve retention rates. Innovations in technology, competitive environments, and the Internet are just several factors that make one-to-one initiatives a reality. Companies can develop these relationships to customize the shopping experience, better predict online buying patterns, entice customers with special offers or services, evaluate the economic advantage of each customer, and build long-term mutually beneficial relationships. The following examples highlight some of the benefits of CRM applications. Dell Computer Corporation exemplifies CRM success by combining IT with front and back office operations. Every PC that Dell manufactures is already sold. From the Internet, Dell customers are able to configure their own system, from thousands of hardware and software combinations, with an easy-to-use ordering system that provides delivery dates as well as progress updates. VI.COST GOALS Major cost goals of CRM include: Increase revenue growth through customer satisfaction. Reduce costs of sales and distribution Minimize customer support costs The following examples illustrate tactics to achieve these goals; 1. To increase revenue growth Increase share of wallet by cross-selling 2. To increase customer satisfaction Make the customer s experience so pleasant that the customer returns to you for the next purchase. 3. To reduce cost of sales and distribution Target advertising to customers to increase the probability that an offer is accepted. Use web applications to decrease the number of direct sales people and distribution channels needed Manage customer relationships rather than manage products (a change in marketing) 4. To minimize customer support costs Make information available to customer service representatives so they can answer any query Automate the call center so that representatives have direct access to customer history and preferences and therefore can cross-sell VII.PRINCIPLES OF CRM The overall processes and applications of CRM are based on the following basic principles. Treat Customer Individually Remember customers and treat them individually. CRM is based on of personalization. Personalization means the content and services to customer should be designed based on customer preferences and behavior. Acquire and Retain Customer Loyalty through Personal Relationship 224 P a g e

5 Once personalization takes place, a company needs to sustain relationships with the customer. Continuous contacts with the customer especially when designed to meet customer preferences can create customer loyalty. Select Good Customer instead of Bad Customer based on Lifetime Value Find and keep the right customers who generate the most profits. Through differentiation, a company can allocate its limited resources to obtain better returns. The best customers deserve the most customer care; the worst customers should be dropped. VIII.ADVANTAGES AND BENEFITS OF CRM Competition is very sharp in current market. Companies must take care of a customer in every area of their specialization by using various communication channels. Customer expects perfect services whether he calls a help line, asks a dealer, browses a web site or personally visits a store. It is necessary to assure him in a feeling that he communicates with the same company whatever form of communication, time or place he chooses. The basic advantages and benefits of CRM are these: Satisfied customer does not consider leaving Product development can be defined according to current customer needs A rapid increase in quality of products and services The ability to sell more products Optimization of communication costs Proper selection of marketing tools (communication) Trouble-free run of business processes Greater number of individual contacts with customers More time for customer Differentiation from competition Real time access to information Fast and reliable predictions Communication between marketing, sales and services Increase in effectiveness of teamwork Increase in staff motivation IX.CONCLUSION Somewhere along the turn of the twentieth century, buyers and sellers lost their intimate relationships. Prior to the Industrial Revolution, sellers knew their customers, many times by name, and generally understood their needs. Mass production built a wall between buyers and sellers where the main concept was to find customers for standardized products. Customers are more empowered today than ever before and the Internet is accelerating the trend toward greater customer empowerment. CRM applications attempt to focus on the customer first, specifically one customer at a time, to build a long-lasting mutually beneficial relationship. 225 P a g e

6 Beside the technological advances, CRM initiatives represent a fundamental shift in emphasis from managing product portfolios to managing portfolios of customers, necessitating changes to business process and people. As companies start to re-engineer themselves around customers, individual employees must also come to terms with changing business process, organizational culture and, thus, the ways they view their customers and how they treat them. REFERENCES Marketing Management by Philip Kotler 3. Marston, Peter. January CRM App Upgrades in a Down Economy. Forrester Research 4. Tsai, Jessica. January Marketing Trends for DestinationCRM.com Customer relationship management (CRM) in financial services, European Management Journal, Vol. 18 No. 3, pp Renner, D. (2000), Customer relationship management: a new weapon in your competitive arsenal, Siebel Magazine, Vol. 1 No P a g e