Customer Relationship Management - Essay Example

Customer Relationship Management The twenty first century is often stated as the age of consumers. The aspect of globalisation has triggered a wave of competition as organizations are desperately reaching out to new markets to capture a share of the market. The increased competition has put the customer at the driver’s seat and it is the main focus of business strategists in different organizations. This has enhanced the importance of loyalty which is perhaps the reason why firms are increasingly resorting to induce better Customer Relationship Management policies so as to retain and manage customers. Customer Relationship Management or CRM is defined as “a business strategy which is aimed at understanding and anticipating the demands of the existing customers and to seek new ones who can serve as potential customers for the organization in the near future” (Rajola, p.25). The advancement of technology has enabled better means of managing customer relationships through ERP programs like Siebel, Oracle etc. Types of CRM CRM is a broad aspect and can be used from the perspective of consumer, business and implementation of strategies. CRM can be broadly divided into three major categories namely, functional, business strategy and implementation. Functional category includes aspects which relate to the functional areas of an organization and includes areas like sales force automation, customer support etc. The business strategy aspect can be divided into three types which are business, technology and customer. The implementation perspective can be divided into analytical, collaborative and operational based practices. Analytical CRM is a tool that seeks to gather and analyse data related to operational aspects of an organization. Tools like OLAP and other data warehousing techniques help in creating a better experience for consumers by improving their relationship with the organization. Collaborative CRM focuses upon the different points of interaction with the customer and the firm and serves to integrate the various channels of communication for a better service delivery. Operational CRM helps in providing solutions with regards to various back and front end support for administrative and customer related aspects by integration with different databases to provide customer friendly support and delivery business processes (Motiwalla & Thompson, p.332-333). Scope and Importance of Customer Relationship Management CRM not only aims at developing a better relationship with the customers but also strives towards creating an all round development of relationship with all the major stakeholders including the suppliers who play a crucial part in the sustainability of the organization. The main aspects of CRM include knowledge of the customer, an effective strategy directed towards maintaining a relationship with the customer, communication and finally the value addition in the product or service offering (Peelen, p.7). Figure 2: Diagram showing the scope of CRM (Source: Buttle, p.299) CRM places the customer at the centre of the framework as all its intended policies are directed towards the development of customer relationship. Management of suppliers is essential considering the fact that they form the backbone of an organization’s business activities. Firms like Wal-Mart have effectively used ERP to bring about a better and efficient relationship with the suppliers so as to deliver greater value to the consumers. Toyota uses a effective CRM framework to manage its large number of suppliers which has helped in attaining efficiency which has reaped numerous operational benefits to the firms which are ultimately being passed on to the customers (Buttle, p.300). The most important benefit of adopting a CRM strategy is that it leads to greater customer loyalty. The total worth of an organization enhances by having a loyal customer base. An effective CRM strategy ensures a better and long term relationship with the customer which leads to greater purchase by the customer. An increased interaction with the customers would also generate an idea of the demands of the customer while also evaluating the present level of product or service offering of an organization. This would help in improving the level of customer service which would reap competitive benefits to an organization (Greenberg, p.30). CRM and Customer Loyalty Customer loyalty is perhaps the area which is drawing attention of almost all the business organizations. The increased competition within the market has made it essential for organizations to develop a long and lasting relationship with the customers. A loyal customer would imply greater purchases which would help the firm to achieve its business objectives. Organizations are therefore trying to increase customer loyalty by using CRM techniques like loyalty card for frequent customers. This form of Customer Relationship is being frequently used by business organizations such as retail stores like TESCO to provide incentives to the repeat customers so as to make them revisit their stores. Management Loyalty cards rewards customers by allocating reward points which are based on the amount of purchase done by them. The reward points could be redeemed by the customer for cash discounts or other attractive schemes as designed by the organization. Using reward programs gives an impetus to the customer to make repeat purchase at a particular store. This serves as an incentive to a regular customer for making repeat purchase at a given store. This increases the relationship between the firm and its customer that also helps in speedy action in case of customer grievances which further improves the client–organization relationship (Jobber & Fahy, p.293). Future Developments The increasingly turbulent business environment coupled with the ever changing demand of the customers has made it essential for organizations to look beyond Customer Relationship Management, towards managing the actual experience of the customer. It has been stated in numerous research works that an effective grievance handling could lead to greater loyalty by the customers. Changes in the organization are also required which would include segregating the CRM, dividing from the marketing division so as to better manage a customer. Focus should also be made to harness the benefits of technology like using web based ERP programs from applications like SIEBEL and Oracle to benefit the customers. Data mining and warehousing tools like OLAP could also help manage relationships with the customers. The key to success, however, lies in a better analysis of the demands of the customers and integrating them with technological advantages so as to ensure sustainable competitive advantage in the market. References Buttle, F. The Scope of CRM. 2008. Customer Relationship Management. Butterworth-Heinemann. Cognizant Technology Solutions. Business Intelligence. No date. Keeping your Customer Just a Click Away. March 09, 2011 < http://www.cognizant.com/InsightsWhitepapers/crm.pdf>. Greenberg, P. The Financial Benefits of CRM. 2004. CRM at the speed of light: essential customer strategies for the 21st century. McGraw-Hill Professional. Jobber, D & Fahy, J. Reaping the Benefits. 2009. Foundations of Marketing 2E. Tata McGraw-Hill Motiwalla, L.F. & Thompson, J. Types of CRM. 2008. Enterprise Systems for Management. Pearson Education India. Peelen, E. Elements of CRM. 2008. Customer Relationship Management. Pearson Education India. Rajola, F. Definition and Purposes of CRM. 2003. Customer relationship management: organizational and technological perspectives. Springer. Read More