Various Utilities of Customer Relationship Management - Essay Example

? Key Words in Marketing Relationship Management) In the 21st century context, it is the most common and popular forms of marketing used by companies to differentiate its positioning from that of its competitors within the industrial context and ensure better loyalty from its customers. Correspondingly, this essay flows with an intention to gain an in-depth knowledge about the various utilities of Customer Relationship Management (CRM) in the 21st century business context. This essay has also been focused on the facts of the historical evolution of CRM in the strategic marketing initiatives. In the discussion section of the essay, the way how CRM evolved in the marketing and benefits of this mechanism in the marketing field have been explained. Customer Relationship Management The marketing concept of Customer Relationship Management (CRM) implies an unconventional strategic initiative to align organisational goals with the customers’ expectations and preferences. With the adoption of this process, the companies tend to improve their transparency commitment towards the customers and attain substantial competitive advantages through their understanding of customer likings accurately. With the collection of data, the companies can also design better strategies for developing the consumer behaviour and therefore, stimulating a change in the overall marketing trend. Today, when the market diversity has become a major challenge owing to globalisation effects and technology advancements have made communication processes more effective as well as complex, understanding the various segments in the market and serving the customer effectively has become a major factor of concern for modern day companies. It is in this context that the concept of CRM has gained considerable importance among modern business firms that binds all the aforementioned factors in a strategically oriented and objective-driven manner (Kamakura et al., 2005). The major benefit that a company can derive from the adoption of CRM is the analysis of the long term relation to be developed with the present and probable customers and also move ahead with an intention for increasing the profit margin and sales of the company. CRM also helps to increase their value towards the shareholders by conducting various marketing activities targeted towards the development and maintenance of the relationship persisting amid the customers and the company (Kamakura et al., 2005). Thus, CRM facilitates in the overall development of an organisation, maintaining a deeper association with the customers’ expectations and thereby, ensuring a more sustainable growth altogether. Literature Review In the recent years, it has been observed that the concept of CRM has received an increased significance in the business and marketing contexts of organisational management. According to Parvatiyar & Sheth (2002), CRM, as an unconventional marketing management framework, implies a broader attention of the modern companies for understanding the various needs of the customers and also incorporating their knowledge of customer preferences to align the strategic operations accordingly. The significance of practicing the CRM concept can also be argued with respect to the companies’ need for obtaining accurate understanding of customers’ preferences and expectations to be incorporated in their marketing strategies with the intention of improving the cooperative relations with their customers and increase the sales and profitability in a sustainable manner therefore. According to Tadajewski & Saren (2009), in marketing, the terms, ‘relationship marketing’ and ‘CRM’ are used as an alternative to each other. Both of these terms are used for forecasting a wide range of perceptions observable amid the targeted customers that further influence the market trends to a substantial extent. Among these perceptions, few of them provide a very narrow explanation of the functional marketing whereas few of them determine the broader framework of the marketing process and also possess practical implications rather than being restricted to theoretical limits. Tadajewski & Saren (2009) further states that the theory of CRM evolved from the relationship marketing, which indicates that the theme of relationship marketing is conceptually similar to that of CRM. Hence, the conceptual explanation of CRM reveals its objective towards the development of a cooperative relationship between the company and its customers. According to Bolton & Tarasi (n.d.), the latest definition of CRM is the strategy designed for developing improved value towards the shareholders of the company through by building strong relationships with the customers and the market sub-divisions to gain an all-round competency. CRM is used as a tool to collaborate the information technology adopted in the company and strategies for relationship marketing in order to increase the profit margin and create strong and healthy relationship with the valuable customers and also its shareholders. Bolton & Tarasi (n.d.) states that CRM is a measure, which provides the companies with enough opportunities for utilising the data collected from the analysis of the customers’ needs as it assists to understand the psychology of the customers and add value to them through the marketing services. Bolton & Tarasi (n.d.) stating that CRM is a set of principles, which helps the companies in focusing towards the dual creation of value i.e. value towards the shareholders through earning profit for a longer period and value towards the customers by understanding their needs and satisfying those in the most convenient manner (Bolton & Tarasi, n.d.). Emphasising a similar notion to the aforesaid statement, Grant & Anderson (2002) states that CRM is the mixture of both the business strategies and a set of tools and technologies, applied by modern companies with an intention to increase its sales volume, explore newer opportunities for expansion, minimise the costs and advancements of customer value and their satisfaction (Grant & Anderson, 2002). However, in contradiction to the notion of Parvatiyar & Sheth (2002), Bolton & Tarasi (n.d.) and Grant & Anderson (2002), Konda (2010) argued that CRM is an effective tool for developing a strong relationship with the customers but it does not always necessarily act as an effective measure for all kinds of companies’ marketing efforts. For example, in a pharmaceutical company, if CRM acts as a motivator of increasing the sales revenue and earning maximum profits, it will very certainly attract ethical issues and contradict the social responsibility obligations of the company. The reason for this is that the CRM tools do not allow the medical professionals to prescribe whatever the patients require but to act in the most justifiable manner for the greater good of the entire society. Hence, even though CRM is an effective measure for improving the marketing strategy of the company, it does not promote for ethical practices. Thus, a significant risk persists when implementing CRM in the current market periphery as the framework entirely focuses on the profit and revenue generation concerns of the company, while for the sake of earning profit, the company might adopt all kinds of unethical practices in developing customer relationship (Konda, 2010). This notion was agreed by Hunt & Vitell (1986), stating that the concept of CRM has theoretical perspective but in practical application within the organization it has always been observed as an effective measure. Hunt & Vitell (1986) states that many of the time, organizations develop the unethical practices while making decisions of the implementation of CRM (Hunt & Vitell, 1986). Winer (2001) also stated that one of the major reasons for companies to adopt CRM framework in their marketing management initiatives is the evolution of advanced technology in the modern business scenario. The change in technology motivates the companies to develop the customer relationship in a faster and effective manner. The need for understanding the consumer behaviour motivates the CRM manager of the company to identify those specific consumers who can provide ‘long term profits’ and therefore, CRM also assists in segregating the market to gain proficiency in earning highest possible return on the investments made (Winer, 2001). Winer (2001) provided a basic model for understanding the steps of customer relationship management which can be followed by the managers for understanding their customers. The models include seven elements i.e. consumer database, understanding the database, proper selection of consumers, targeting those consumers, building up relationships with them, maintenance of privacy matters and metrics for analyzing the progress of the CRM program (Winer, 2001). Contradicting to the notion developed by the other authors, Payne & Frow (2005) states that the meaning of CRM does not possess any similarity between the theoretical perspective and the real world scenario. Arguably, CRM is not merely a technology solution but requires certain strategic vision and the analysis of ‘customer value in multichannel environment’ (Payne & Frow, 2005). It is in this context that in the practical business world, it does not possess much emphasis, unlike that described in accordance to the theoretical perspectives. To be noted, CRM cannot be explained in terms of advanced information technology only, as it needs both the aspects of customer orientation and contributions of tools and technology (Payne & Frow, 2005). In agreeing to the notion, Aaker (2004) stated that CRM can be regarded as an effective tool but it also requires many other elements, such as the support of the customers along with the measures of certain technological tools. Aaker (2004) also affirmed that most of the modern companies use CRM for creating brand awareness among their customers rather than solving customers’ problem and satisfying their needs. Therefore, much of the focus remains in increasing the productivity of the company instead of meeting the needs of the customers. It can also be termed as one of the drawbacks of the concept of CRM, which is often found to be derived by the larger organizations for the sake of raising their profit (Aaker, 2004). Evidently, it has been observed that despite of all these quotations, the usefulness of CRM has not declined in majority of the companies. But still there are certain companies which are facing various challenges during the implementation of effective CRM within the organization. The implementation of CRM is different from one company to the other as the CRM requires different needs and solutions and are also to be treated with separate application. From the above discussion of Konda (2010) it has been observed that the effective implementation of CRM within the organization requires special treatment and if not implemented properly, few of the organizations might opt for the unethical practices. Discussion Based on the findings obtained from the above conducted discussion, CRM can be elaborated in various ways based on a range of varied explanations to the subject. According to Faed (2013), CRM is “an advanced level of marketing strategy that produces the best relationship with the customers to intensify value, satisfaction and customer loyalty”. CRM can also be regarded as an unconventional relationship management technique all over the departments of the organization providing maximum focus on the communication channel efficiencies involving the customers. Apparently, in the field of marketing, CRM has a wider meaning. It acts as an effective tool for the development of a strong and healthy relationship with the existing as well as the potential customers and benefiting the company through it. It can be found as a business strategy in the field of marketing for interacting with the customers regarding their needs and making arrangements for the satisfaction of those needs. The marketing scholars have also denoted CRM as a methodology, which helps the managers to maintain a healthy relationship with their customers (Heczkova & Stoklasa, n.d.). In a marketing field, it has further been observed that CRM assists the companies to encourage its marketing departments in identifying its best customers and arranging for the marketing strategies in order to increase its sales volume in a sustainable and competent manner over the long-run. The major benefit of CRM is therefore focused on the area of satisfying the needs of the customers through the proper analysis of the problems of the customers and building a strong relationship with them (Heczkova & Stoklasa, n.d.). It is worth mentioning in this context that CRM was introduced in between 1980s and 1990s, as a separate area of marketing. The researchers quoted that the introduction of this particular framework marked a conceptual shift in the marketing concept. The reason for the introduction of this subject was to change the marketing theory from transactional to relational. At the first phase of introduction, the meanings of CRM were fragmented and isolated in the conceptual paradigm being in conflict as an all-inclusive management initiative or a marketing initiative. Nevertheless, the requirement of a conceptual framework like the CRM remained undisputable since its initial implementation in the modern decade as was highly realized by the contemporary marketers, when the direct customer marketing needs were observed by the companies. Thus, the main reason for the emergence of the conceptual framework of CRM was to mitigate the setbacks of the traditional form of transactional method and implement a more systematic model in order to gain profitability and also satisfy its customers’ needs assuring a more sustainable growth and development of the company (Heczkova & Stoklasa, n.d.). According to Gray & Byun (2001), CRM serves three of the major benefits to the companies adopting the aforesaid technique. Those benefits principally entail improving the company’s capacity to preserve and gain more customers, maximize the long term value of the customers and develop the customer service without raising the cost of service (Amofah & Ijaz, 2005). Looking into these benefits, almost all the companies by the late 1990s adopted this technique and also started appointing separate officials to concentrate on this issue. In the present era, it has been observed that CRM, along with the advanced tools and technologies of marketing management are providing the companies with greater benefits. All these uses of the framework have therefore compelled the companies to adopt CRM strategy and attain its organisational goals and objectives. Conclusion From the above study of CRM, it has been observed that the mechanism has a huge significance in the modern business era. It provides companies with an opportunity to practice direct communication with the customers and therefore, obtain an in-depth understanding the customers’ divergent needs to be sufficed accordingly. Undoubtedly, customers are the major elements of the business and if they are satisfied to the full, it is obvious that the company can raise its profit margin in a sustainable manner over its long-run performance. Among the principle benefits, companies can develop their brand loyalty and gain a strong positive impression amid the targeted customers with the adoption of CRM. The CRM has also given rise to the system of relationship marketing, where the companies can develop long term association with their customers and also seek for earning long term profits. Hence, from the entire essay, it can be concluded that CRM possesses huge practical benefits to the companies and its customers as well. References Aaker, D. (2004). Leveraging the Corporate Brand. California Management Review, 46 (3), 6-18. Amofah, P., & Ijaz, A. (2005). Objectives, strategies and expected benefits of customer relationship management. Retrieved from http://pure.ltu.se/portal/files/30961216/LTU-PB-EX-0503-SE.pdf Bolton, R. N., & Tarasi, C. O. (n.d.). Managing customer relationships. Abstract, 1-38. Faed, A. (2013). An intelligent customer complaint management system with application to the transport and logistics industry. United States: Springer Science & Business. Grant, G. B., & Anderson, G. (2002). Customer relationship management: a vision for higher education. Web portals and higher education technologies to make it personal, 23-32. Heczkova, M., & Stoklasa, M. (n.d.). Customer relationship management – theory and principles. Retrieved from http://www.opf.slu.cz/aak/2011/04/heczkova.pdf Hunt, S. D., & Vitell, S. (1986). A General Theory of Marketing Ethics. Journal of Macromarketing, 6 (1), 5-16. Kamakura, W., Ansari, A., Bodapati, A., Fader, P., Iyengar, R., Naik, P., Neslin, S., Sun, B., Verhoef, P. C., Wedel, M., & Wilcox, R. (2005). Choice models and customer relationship management. Introduction, 279-291. Konda, N. (2010). Customer relationship management – pharmaceuticals marketing. Biomirror Journal, 1 (5), 1-13. Parvatiyar, A., & Sheth, J. N. (2002). Customer relationship management: emerging practice, process, and discipline. Journal of Economic and Social Research, 3 (2), 1-34. Payne, A., Frow, P. (2005). A strategic framework for customer relationship management. Journal of marketing, 69, 167-176. Tadajewski, M., & Saren, M. (2009). Rethinking the Emergence of Relationship Marketing. Journal of Macromarketing, 29 (2), 193-206. Winer, R. S. (2001). A framework for customer relationship management. California management review, 43 (4), 89-105. Read More