Customer Relationship Management - Assignment Example

?Mid Semester Test Number relationship management (CRM) is an approach to creating, maintaining and expanding positive relationships with customers (Anderson & Kerr, 2002, p. 2). Though, in most companies, sales representatives are the only employees that deal with customers directly, the CRM approach implies that not only marketing and sales departments take care of communicating with the clients, but the whole organization works towards achieving the goal of building and maintaining good relationships with prospects and customers. Therefore, it can be said that CRM is a strategy and a tool the company should follow and use in order to be more competitive. Furthermore, CRM is often referred to as ‘relationship marketing’ (Parvatiyar & Sheth, 2001, p. 3) and has much to do with customer acquisition and retention (Gupta, Lehmann, & Stuart, 2004, p. 7). These processes should, in their turn, be addressed by the whole organization as those playing a key role in organizational success. In addition, modern CRM is the approach that makes companies not simply sell products, but fulfil the needs of the clients by means of creating value. Creating value, in its turn, though is a marketing concept, works as a strategy for building certain relationships with the clients and, in such away, creating a competitive advantage for the company. 1. Explain a. why quality, value, and customer satisfaction are important to each business The goal of any business is to bring profit via providing clients with goods or services. However, as competition is the globalized market is continuously becoming more and more fierce, companies have to be continuously developing and changing in order to remain competitive. Therefore, quality of goods and services, value they bring to the customers and customer satisfaction are the tools for creating competitive advantage in the market. Quality of the goods and services being marketed to the prospects is the very first requirement for the businesses willing to remain successful in the market. Good quality results is customer’ shopping experience being positive. This, in its turn, builds positive brand experience and recognition. Consequently, a company has higher chances of its clients’ returning. Value that the good or service carries is to satisfy both immediate physical and mental needs of a client. Creating value, in its turn, builds customer loyalty that is then expressed in increased sales and profit for the company (Reichheld & Teal, 1996, p. 3). A quite similar is the purpose of achieving customer satisfaction. A satisfied and happy client is more likely to return and purchase the goods or services of the business again. This is directly related to the company’s profit and, hence, opportunities for further growth and development. b. how word of mouth has evolved with social media and technology With the development of social media and communication technologies word of mouth has become an important tool of building company’s image and brand identity. First of all, since the world has become more interconnected, it is easier for businesses to market their products. At the same time, advanced technologies are of a help to prospects and customers in the process of sharing opinions and experiences related to the company’s product. However, the development of social media and communication technologies is both an opportunity and a threat to the businesses. Social media and digital communication channels provide businesses with wider opportunities for marketing their products and communicating the clients. In addition, since people often buy in response to independent positive opinions (Silverman, 2001, p. 6), word of mouth, which is being spread fast nowadays, has even evolved into the appearance of new marketing concepts, such a world of mouth marketing and viral marketing. Making people talk about the product in a positive light is, according to Silverman (2001, p. 6), one of the most effective ways of making people buy the product. On the other hand, however, these same tools and processes help clients and prospects to communicate with each other, thus sharing information on the company’s products faster. Therefore, both negative and positive information has a potential of getting shared by the consumers within very short time periods. c. the business consequences of dissatisfaction in a connected world Since the world is currently very connected, it is important for businesses to make sure their clients are satisfied. If they are not, however, the world of mouth, with the help of social media and modern communication technologies, will bring negative information about the brand to a great number of prospects and customers. As a result the business might lose loyalty and trust of its clients. The brand image and company’s reputation, creation of which took much of the company’s time and resources, get spoiled in minutes. A 2010 research conducted by Sysomos Inc. indicates that 29% of Twitter.com messages get responses and are spread over the Internet within a few hours. This means that if a businesses wishes to cure the situation created by a negative feedback from a dissatisfied customer, it has to take some measures immediately. 2. What are differences in the three businesses that you can recognize from the above vignette? Among the differences between the three businesses described in the vignette is, first of all, their working in different industries. The business of Catherine is a private equity company that carries out organizational tasks on behalf of its franchisees. This company does not work with the end users directly. George's company is a wholesaler with 35 years of experience. The business sells its products through builders, electrical retailers, and department stores. So, this company, just like that of Catherine, does not work with end users directly. Like Catherine’s company, George's business is more focused on working with suppliers of goods or services for the needs of their companies. Alan’s company is a retailer of motor cars. The business communicates with its clients directly, with no intermediaries. Therefore, its business model is quit different from those of George's and Catherine’s companies. However, it has one thing in common with the business of Catherine. Both of these companies implement their advertising strategies on their own, while Alan’s company conducts this task mostly through builders, electrical retailers, and department stores. Another difference is that Catherine’s business does not require any post-sales service, while the companies of George and Alan do provide clients with additional support. Their technicians rectify any warranty concerns, and repair equipment. Catherine’s company, in most cases, does not deal with the customers at all. George’s company has more contact with the end users because the nature of the business often involves working with clients directly. Alan’s company is the one that has constant and continuous direct interactions with its clients. 3. How would these differences provide challenges for each general manager? In relation to CRM management each of the businesses has own challenges. Catherine’s company, since has no direct communication with the end users, has no direct influence on managing relationships with the customers. Nevertheless, the company is responsible for national advertising and, thus, has an indirect influence on prospects and customers - through advertising. However, what it lacks is direct communication with the clients with the purpose of receiving customer feedback. Customer feedback is the client’s means for sharing his or her buying experience (Toney & Throgmartin, 2009, p. 58). A customer feedback system, in its turn, would help the company to monitor it client’s buying experiences and, as a result, modify its offerings in order to improve such buying experiences. Since in Catherine’s company nearly all of the communication with the customers is conducted through the franchisees, effective and standardized communication channels should be established between the franchisees and the company in order for the business to have an opportunity to work effectively and collaboratively. However, since every franchise operator is an independent entity, it might be challenging to transfer the goals, objectives and strategies of Catherine's company onto all of its franchisees. Another challenge for Catherine’s company is that it cannot provide customer service and support directly, but only through its franchisees. So, advanced collaboration would also be of help to the business. George’s company has more direct communication with the end users. Though the company sells through builders, electrical retailers, and department stores, some clients serviced by the company directly. The showroom with products and product information George has helps to deliver the company’s marketing message to the end users. in addition, service technicians help clients in the post-dales service. So, George has an opportunity to receive some feedback from the clients directly. Nevertheless, most of the sales are indirect and, thus receiving customer feedback is also a challenge for George’s company. for this reason both George’s and Catherine’s companies have a problem generating leads for additional sales. Though it is not crucial in the case of Catherine, for George’s company additional leads might help to increase sales significantly. As for Alan’s company, since it works with the end users directly, the major challenge would be to, first of all, design and implement effective sales and communication processes. It can be seen that there exists internal rivalry between the salespeople of the business. This issue should be addressed for the purpose of improving internal organizational processes. Such improvement should, in its turn, result in salespeople’s being more devoted to their jobs and more loyal to the company. In addition, improved internal management will result in lower employee turnover. It is important to ensure both salespeople and mechanics provide superior customer service to the clients of the company. Therefore, the company has to deal with challenge of change design and implementation: improvement of customer service will require changes in the internal strategies and policies of the company. For example, salespeople and mechanics may be offered new remuneration policies tied up to customer satisfaction rates. 4. What concepts from this unit would help each of the general managers to manage their business? Effective customer relationship management involves planning, scheduling and controlling of pre- and post-sale activities of a company. All, this, of course, requires a company to develop a clear and effective CRM strategy. Creating an effective CRM strategy requires a company to take the following steps (Buttle, 2008, p. 19): Identify the clients and determine their needs to be fulfilled by the company. Differentiate between the customers in order to determine the target segment, as well as define potential customers Interact with the clients with the purpose of getting a better understanding of their needs. Customize (modify) the offering in order for it to meet the customers’ needs more precisely. All this requires a company to revise its marketing strategies and, if needed, develop new ones. For this purpose a marketing audit should be conducted in the first place. Marketing audit is an activity that involves detailed examination of the company’s marketing strategies and activities in relation to its direct marketing environment. The audit will help to determine problem areas and find solutions to the problems related to the company’s marketing performance (Loudon, Stevens & Wrenn, 2003, p. 219). Conducting a marketing audit for a company will help it to, first of all, get a clear and structured view on the existing strategies, processes and systems being implemented by the businesses. Secondly, the audit will help to reveal the most problematic areas of operations and, consequently, assist in developing plans for eliminating the problems. A revised marketing plan will, then, be based on the marketing audit. The advantage of a facts-based and clear marketing plan is that it would outline for the manager the major areas to pay attention to, and provide tools for measuring the effectiveness of operations. At the same time, in order for the marketing plan to be implemented effectively, it must be communicated to and supported by all the divisions of the organization (Luther, 2011, p. 21). In case of Catherine’s company, for instance, the marketing objectives of the business should be communicated to its franchisees. In addition, the business would have to design certain measures for controlling, where possible, the fulfilment of the plan’s objectives. A similar situation is with George’s company. It, too, would have to develop strategies and tools for implementing its marketing objectives within the businesses of its retailers - builders, electrical retailers, and department stores. In order to implement these tactics an effective action plan should be developed. It will help the managers to clearly see how and when specific steps targeted at implementing the marketing plan should be taken. Such a plan of actions will help to both organize the activities of the company and control the timing of their implementation. It will add clarity to organizational processes by means of strictly defining what should be done, when the task should be completed and who is responsible for its fulfilment. 5. What broad strategies and tactics would you recommend for each business to build quality relationships within each business. Since quality relationships with company’s customers is crucial for the success of the business, this objective should, of course, be expressed in the company’s vision and mission statements. As a result, the goal of high customer satisfaction rates will get incorporated into the company’s culture. Such treatment of CRM objectives is especially important for Allan’s company because it has direct contract with the clients. If integrated into corporate culture and communicated well, this customer-orientation approach will help Alan’s company to solve some of its existing problems. At the same time, it should be remembered that any CRM strategy itself should be based on the overall company and marketing strategies. Therefore, the CRM strategy should be based on the goals and objectives of the business. They define which particular CRM approach will be the best for the company. Among such approaches are: Product-based selling Managed service and support Customer based marketing Personalized relationships marketing (Reynolds, 2002, p. 34). It can be seen that product-based selling is the most suitable for Catherine’s company approach because this business just gathers and analyses information about customers’ transactions. It is relatively difficult in this situation to develop an adequate CRM strategy because the marketing process is more focused on the advantages of the product than the needs of the clients. A solution might be to introduce certain software that will help to analyse information received from the franchisees deeper and, as a result, respond to the findings accordingly (Christopher, Payne & Ballantyne, 2002, p. 82). However, a more effective practice might be to shift from product- to value-based selling or, at least, to managed service and support strategy. This, however, will require a company to change its vision and marketing strategies. Managed service and support is the philosophy of George’s company - though it sells through retailers, the business has an own sales and, what is more important, support department. This helps to partially facilitate and improve customer relationships. That support department is the very first expression of CRM within the company – it allows to, first of all, determine which particular customers the business wants to retain and, secondly, give more attention to the most important clients. Enhanced levels of service and support, thus, serve as a tool for improving relationships with the clients. In order to improve the CRM, the company might establish a contact centre for clients that buy from builders, electrical retailers, and department stores. Another option is to implement telemarketing sales strategy, introduce contact management or sales force automation systems to help the company work with its clients more closely. Alan’s company uses customer-based marketing because it works with the clients directly and can diversify among them, offering different products to different groups of clients. This business is more customer-oriented than the other two and, as a result, might benefit from understanding its customers better. An analysis of customer profitability, competitor responses customer loyalty and risk management, among others, should be conducted in order for the business to raise its customer satisfaction rates. This will help to create different offers to different customer groups and measure the success of each offering type. 6. What are the advantages of implementing a CRM programme and how would this improve the ability of each general manager to manage their business? In general, it can be said that implementing the strategies outlined above will move each of the companies onto a higher level of CRM. This shift, in its turn, is to increase sales and, consequently, profitability through improvement in customer knowledge and improved levels of customer satisfaction (Mithas, Krishnan & Fornell, 2005, p. 201). As a result, each of the companies will become more client-oriented and, therefore, its proposition will carry more value for the client. In addition, implementing a CRM program, since will increase customer satisfaction, will have a positive effect on brand and company image and reputation. Considering how powerful the media and communication technologies are today, this will give another competitive advantage to the companies: work of mouth marketing will contribute to the positive image of the company. Furthermore, marketing audit will be conducted, as well marketing plan and action plan developed, in the process of implementing a CRM. This will help general managers to identify strengths and weaknesses of their businesses, and provide a solid basis for developing more effective strategies. In addition, the process will help to clarify and structure communication and operations channels, as well as, potentially, automate some aspects of companies’ operations. This means implementation of a CRM program will result in coordination of channels, technologies, customers, and employees (Boulding, Staelin, Ehret & Wesley, 2005, p. 161). Furthermore, the positive results of implementing a CRM program include identification of target customers, developing positive relationships with those customers and defining customer segments (Bock, 2010, p. 3). On the basis of these processes companies may introduce software applications that will help them to deal with the clients in a more organized, fast and efficient manner. Besides, an effective CRM program will benefit company’s customers as well: they will be getting better customer service and will enjoy more personalized attitudes. References Anderson, K. & Kerr, C. (2002). Customer relationship management. McGraw-Hill Professional. Bock, M. (2010). The Advantages and Disadvantages of Relationship Management: How Can a Company Integrate Recent Research Findings in Order to Make Its CRM System More Efficient? GRIN Verlag. Boulding, W., Staelin, R., Ehret, M. & Wesley, J. (2005). A Customer Relationship Management Roadmap: What Is Known, Potential Pitfalls, and Where to Go. 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