Customer Relationship Management - Essay Example

?Running Head: Relationship Management Relationship Management [Institute’s Relationship Management Customer relationship management is a form of business strategy that integrates technology with customer service by focusing on maintaining association with the company’s existing and potential customers. It is concerned with sales but also includes other functions of a company, such as marketing and customer service. The whole purpose is to facilitate the buying or selling experience for a client. They aim at attracting prospects and sustain close interactions with the existing customers. Over the years many things have changed and now a great deal of emphasis is laid on the importance of customers to a company. Marketing tactics have evolved from mass marketing and advertising to target or niche marketing where preferences of each customer are given equal importance. In all this, customers have benefitted tremendously, now special attention is being given to their needs and according to that business strategies are designed (Peelen, 2005). The customer making a purchase has two options, either he can make a direct purchase from the manufacturer itself – use one channel, or opt for multiple channels where he can buy the same product but here this product would have passed through several channels before reaching the intended customer. Benefits of multiple channels far outweigh those of single channel, for instance, if I were to buy a novel, for that I would have to track down the author’s or publisher’s address to personally go there and ask for a copy of that book. Not only would it be time consuming, it would mean a lot of trouble to go though. On the other hand, I could go to any bookstore close to my house and purchase it. There, I can easily tell the sales assistant what I am looking for and in case the novel needs to be returned or exchanged, I would be able to do that. Whereas through the single channel, there may not be any guarantee for my purchase. Therefore, buying through multiple channels is a more feasible alternative. Although buying directly from the manufacturer has its own benefits. A customer is showered with more attention and his preferences are taken into consideration. The product itself may be a custom design based on the needs of the customer. This way the seller can obtain valuable feedback directly from the client instead of wasting money on expensive research. Usually customers opting for single channel are affluent and, hence, appreciate the exclusivity. It has been observed that customers choosing multiple channels are more valuable to a company as compared to those opting for a single channel. This is because shopping is made a very convenient experience for them; they can buy products online from the web or even book their orders on the phone instead of making the trip to the store. In addition, in case they want to track the delivery of their products, this can be done easily either on phone or online by using the tracking code usually provided by the couriers (Rojalo, 2003). They are given many payment methods to choose from depending on whichever is the most feasible for them. They can make payment with cash on delivery, issue a cheque or even use their credit card. Hence, at each stage they are being facilitated and so the customer would remember the ease with which they shopped and would return repeatedly for the same service. Customers overall prefer systems which make processes simple, fast and reliable for them and multiple channels guarantee all of that with their expeditious service. Nordstrom is a famous US retailer with 225 stores located nationwide. Being in the business for more than a century, Nordstrom realizes the importance of its customers and knows how vital it is to provide customers with complete ease and best deals, hence, offering customers a comfortable buying experience with the use of its multiple channels network. In order to measure the effectiveness of customer relationship management, CRM metrics have been designed to gauge whether this endeavor is a success or not. Three key CRM metrics are the following: cost justification, value assessment, and preferences (Online Data Analysis, 2010). When a company decides to incorporate customer relationship management that results in many benefits but it is a hefty investment as well. Therefore, the benefits should exceed the costs. If Nordstrom were to improve their point of sales service, the costs incurred for doing so should be such that could be recovered by the company. They can measure the effectiveness of this new venture by measuring the return on investment and the increase in sales because of more efficient point of sales services. Value assessment is another important factor that needs to be considered. If Nordstrom wants to decrease the delivery time taken by the products to reach the customers, they would do so by incorporating a speeder method. However, by doing so it should not decrease the promised quality. Customers should not feel that they are being ill-treated and their opinion about the company’s superior customer service should stay intact. Preferences are the whims of customers that need to be taken care of these could be either existing or any new suggestions. A customer who frequently visits the same Nordstrom outlet could expect that the sales staff would remember him and know what sort of service to provide. This is something that he would come to expect and an absence of it would fall short of the customer’s requirements. Therefore, the utmost importance should be given to fulfilling customer standards and meeting expectations. All these metrics are useful in finding out how effective a company’s CRM strategy is. Cost justification measures CRM from a financial perspective whether it is profitable for the business or not and by how much will the increase in sales be as compared to the costs. Value assessment and preferences may not provide quantifiable data but they are important nevertheless. By using value assessment it is known how satisfied the customer is with the current service being provided, preferences measure the expectations and standards created by the customers that they want the company to meet. The best measure to follow is value assessment because if the customer is satisfied, this means that he will keep going back to the same store and even prefer it to better alternatives. Also, recommend it to family and friends, hence, creating word of mouth marketing. If the customer is happy with the quality then even higher prices can be charged as value additions to the product. References Online Data Analysis. (2010). Are multichannel customers more valuable than singlechannel customers? Retrieved on March 02, 2012 from http://www.onlinemediaanalyst.com Peelen, E. (2005). Customer relationship management, Pearson Education. Rajola, F. (2003). Customer relationship management: Organizational and technological perspectives. Springer. Read More