Customer Relationship and Sales Management - Report Example

The New Business Deal: Relationship Management (CRM) Relationships are the essential nature of life. They are the unseen fibres which create a unique connection between organisations and people. Managing relationships is an extremely challenging and multifaceted phenomenon. Organisations are recognising the essence of the integral role played by relationships in attaining and sustaining competitive advantage at the market place (Buttle 2008). Peter F. Drucker, a famed management consultant today, had argued that the purpose of any organisation is to generate customers. An organisation’s success largely depends upon maintaining customer satisfaction (John 2003). Increasing insecurities, volatilities, and complexities at the market place alongside escalating global competition are compelling the business organisation to spend in creating and sustaining customer relationships (McKenna 1991). Innovative and advanced marketing tool instruments are being invented to create, satisfy and maintain customers for realising viable competitive advantage. Customer Relationship Management (CRM) has recently came out as a strategic tool for current businesses. It has its beginnings in the time-honoured business principle which claims that every business operation should revolve around customers (Anderson & Kerr 2002). CRM involves customised or personalised service or one to one relationships which demands full employee involvement in customer service. Every employee of the organisation has to be familiarised with building customer advantage (Greenberg 2004). It necessitates delineating primary business and customers, developing and consolidating business processes, and putting into effect and supervising programmes intended to build customer advantage (Jha 2008). If executed efficiently and appropriately CRM provides immense gains to businesses in terms of profitability, improved service cost and time, and customer satisfaction. Advantages of CRM in Managing Customers Strong customer relationships furnish businesses with numerous advantages. Primarily, the relationship can generate a loyal customer. The loyal customer, more than simply a repeat buyer, has an emotional bond to the supplier (Abram & Hawkes 2003). These emotions can involve liking, confidence and trusting in the organisation’s capability of responding efficiently and promptly to a customer complaint or problem. Loyal customers can be perceived as business assets who are a potential source of beneficial word-of-mouth recommendations and are more unwilling to offers of competitors (Payne 2005). Moreover, CRM systems offer a leverage point to achieve economies of scope. Loyal customers are normally more open to line extensions (Payne 2005). Expanding the customer base can enable ‘cross-selling complementary products’ and ‘selling-up to higher quality substitutes’ (Olson 2001: 23). Also, recently, the ability of CRM to reduce and control expenditures or costs has been examined. CRM, along with other tools or mechanisms, can aid in the reduction of turnover in the customer base of an organisation (Peel 2002). Improved customer management can lead to reduced service and sales costs, greater customer retention and, hence, reduced customer replacement costs (Johnson & Gustafsson 2004). Usually motivated by the requirement to enhance customer satisfaction, and consequently, customer retention, the CRM technology can help in identifying a segment or customer to concentrate marketing and sales operations (Knox, Maklan, Payne, Peppard & Ryals 2002). There is a growing realisation that profitability is a major aspect in deciding about product pricing and packaging, and cross-sell promotions anchored in historical and potential consumer information (Schuster 2005): “Lasting value will be better understood to allow for organisations to think about potentially good prospects and the overall return on the relationship that is developed over time” (p. 66). The technology of CRM will be combined with functional and back-office systems to render a real-time, picture perfect data setting (Tanoury & Ireland 2002). CRM will not merely be concerned with better customer service, but also customer service in the paramount interests of the customer and the organisation itself. Taking Advantage of the CRM Technology CRM requires that a business perceive customer relationships as a way to gain knowledge or understanding of the needs and wants of customers and how best to attract, satisfy and retain them while simultaneously aiding the organisation in the realisation of its goals (Prescott 2001). To personalise solutions that improve the functionality of customers and to identify their new functionalities, customer relationship and collaboration are needed. Systems of customer relationships comprising end users, members, research companies, advertising units, etc. are formed and call for management (Jha 2008). Weiss emphasises the absence of sufficient supervision in the literature about how to create these rapports or relationships. He proposes that online interactivity and customisation or personalisation can be employed to assist in the development of emotional bonds with stakeholders in manners that no other instrument can (Swift 2000). Nonetheless, Butler claims that there are two major challenges in CRM confronted by complex organisations (Schmitt 2003). First, the regularity of response from various customer channels with the organisation should be dealt with. For instance, online customers can receive prompt response to their registrations, questions, complaints, and suggestions; however this may not be valid for customers who get in touch with the organisation through other points of contact such as traditional retail shop or telephone (Schmitt 2003). Another challenge is the importance of viewing CRM holistically, as a component of every activity of the organisation, from marketing to sales. The inclination may be to perceive CRM limitedly as calculated sequences of transactions (Peelen 2005), but efficient and competent strategic execution of CRM necessitates information from every important division for the intention of making use of customer information adeptly to build relationships or develop affiliations with customers. Is Technology always the Answer? A broad array of concepts such as relationship management, relationship marketing, customer management, and others have been coined to explain the activities or mechanism intended to create durable profitable customer relationships (Newell 2003). Levitt (1986 as cited in Jain, Jain & Dhar 2002: 97), in one of his initial investigations, described that the relationship in fact deepens after the sale and turns into a crucial factor in customer’s preference of seller for the following purchases. He pointed out that the sale only completes the relationship. How strong the relationship is, depends on how effectively the relationship is managed by the organisation. The importance of shared benefit through relational transaction has been underlined in numerous studies (Khirallah 2000). Groonroos (1994 as cited in Jain et al. 2002) and Morgan (1994 as cited in Jain et al. 2002) have described relationship marketing as “a set of activities directed towards establishing, developing and enhancing customer relationships for mutual exchange and fulfilment of promises” (p. 97). Comparable conceptions have been articulated by several researchers. But one of the most important arguments of these scholars is that CRM is one of the most viable and useful solutions to modern business challenges (Greenberg 2004). CRM related tasks have remarkable effect on profitability. An inclusive description of CRM is presented by Bennett (1996 as cited in Newell 2003) which illustrates that CRM aims to develop lasting, loyal, cooperative and trusting customer relationships, exemplified by sincere concern for the provision or delivery of premium services, openness to customer suggestions, equitable transaction and the eagerness to compromise short term benefit for long term advantages. Bennett has attempted to illustrate the fundamental concerns involved and gains of developing relationships. The importance of relational transactions contrary to transactional exchanges has been forcefully underlined in the relationship marketing literature (Newell 2003). Mutual exchange and realisation of trust and loyalty, personalisation and communication efficiency have been revealed as important components in relationship management (Knox et al. 2002). Basic service provisions and distribution of organisational knowledge have been discovered to influence customer retention (Abram & Hawkes 2003). Gruen et al. (2001 as cited in Jha 2008) stated that interpersonal affiliations between sellers and buyers function as switching hurdles and put off customer switching. The rising interest of scholars, researchers and professionals in CRM or relationship marketing has generated a rich array of literature addressing definitions, paradigm shift, components, features, benefits, connections with other factors and performance issues (Payne 2005). Theoretical perspectives have been developed and evidence-based studies have been published on building a CRM model. Quite a few endeavours have been initiated to determine the measures of success (Davids 1999). Majority of the studies has indicated financial pointers as the only bounds for measuring the effectiveness of any CRM system. The need for an instrument, concentrating on behavioural domains for assessing the success of CRM has been directly realised by practitioners (Khirallah 2000). This essay has identified relevant indicators of CRM systems and presented an idea in enhancing value for competitive advantage in the contemporary market place. Conclusions Organisations will eventually tighten their view of customer relationship management, require concrete non-financial and financial return on investment and try to have CRM output assessed and confirmed such that suits the business and satisfy customer expectations. The prevailing assumption that all organisations particularly those with elevated customer turnover, should exert an effort to efficiently operate the CRM system, will become irritated with innovations. It is unquestionable that customer information is the heart of any organisation and thus, CRM innovations. Yet, CRM requires a better execution if it were to instigate a corporate resurgence. Similar to any other innovations, CRM also has its own problems and weaknesses. Any business that tries to put into effect CRM may from now on aim to concentrate on the creation of value and on an uninterrupted flow of profits. They should not view CRM as incentive or bribe or an instrument of coerced relationships. The organisations will understand that for CRM to set off corporate revival, the CRM obligation should rise to the highest organisational level. CRM will be more focused on strategy, and hence capable of focusing on customer expectations. CRM system will go back to the function of an auxiliary instrument. The ultimate goal of the organisation is for CRM to be an instrument of cultural change and organisational integration. In other words, a genuine CRM promotes a relationship perception of the world that transcends customers, involves a wide array of individuals and enables corporate revival. References Abram, J. & Hawkes, P. (2003) The Seven Myths of Customer Management: How to Be Customer-Driven without Being Customer-Led, Hoboken, NJ: John Wiley & Sons. Anderson, K. & Kerr, C. (2002) Customer Relationship Management, New York: McGraw-Hill. Blattberg, R. (2002) At Many Firms, Technology Obscures CRM, Marketing News , 5. Buttle, F. (2008) Customer Relationship Management, Burlington, MA: Butterworth-Heinemann. Customer Relationship Management Overkill? (2003) The CPA Journal , 12+. Davids, M. (1999). How to Avoid 10 Biggest Mistakes in CRM. The Journal of Business Strategy , 22-26. Greenberg, P. (2004) CRM at the Speed of Light, California: McGraw-Hill Osborne Media. Jain, R., Jain, S. & Dhar, U. (2002) Measuring Customer Relationship Management, Journal of Services Research , 97+. Jha, L. (2008) Customer Relationship Management: A Strategic Approach, Global India Publications. John, J. (2003) Fundamentals of Customer-Focused Management: Competing through Service, Westport, CT: Praeger. Johnson, M.D. & Gustafsson, A. (2000) Improving Customer Satisfaction, Loyalty, and Profit: An Integrated Measurement and Management System, San Francisco: Jossey-Bass. Khirallah, K. (2000). Customer Relationship Management: How to Measure Success, Bank Accounting and Finance , 22-30. Knox, S., Maklan, S., Payne, A., Peppard, J. & Ryals, L. (2002) Customer Relationship Management: Perspectives from the Market Place, Burlington, MA: Butterworth-Heinemann. McKenna, R. (1991) Relationship Marketing: Successful Strategies for the Age of the Customer, Cambridge, MA: Perseus Publishing. Newell, F. (2003) Why CRM Doesnt Work: How to Win by Letting Customers Manage the Relationship, Princeton, NJ: Bloomberg Press. Olson, E. (2001) CRM: Go Deep, Sales and Marketing Management , 23. Payne, A. (2005) Handbook of CRM: Achieving Excellence through Customer Management, Burlington, MA: Butterworth-Heinemann. Peel, J. (2002) CRM: Redefining Customer Relationship Management, Woburn, MA: Digital Press. 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